UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
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[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Global Sports, Inc.
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(Name of Registrant as Specified In Its Charter)
Not Applicable
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[LOGO OF GLOBAL SPORTS, INC.]
April 30, 2001
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Global Sports, Inc. which will be held on Thursday, May 24, 2001 at 10:00 a.m.
local time at the office of Global, 1075 First Avenue, King of Prussia, PA
19406. The official notice of the Annual Meeting together with a proxy
statement and proxy card are enclosed. Please give this information your
careful attention.
At the meeting, shareholders of Global are being asked to elect seven
directors of Global, to approve an amendment to Global's 1996 Equity Incentive
Plan to, among other things, increase the number of shares of common stock
issuable under the Plan, to approve an amendment to Global's certificate of
incorporation to, among other things, increase the number of shares of capital
stock authorized under the certificate and to act upon such other business as
may properly come before the meeting.
Whether or not you expect to attend the meeting in person, it is important
that your shares be voted at the meeting. I urge you to specify your choices
by marking the enclosed proxy and returning it promptly.
Sincerely,
/s/ Michael G. Rubin
Michael G. Rubin
Chairman of the Board, President
and Chief Executive Officer
1075 First Avenue, King of Prussia, PA 19406 (610) 265-3229
GLOBAL SPORTS, INC.
1075 FIRST AVENUE
KING OF PRUSSIA, PA 19406
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held May 24, 2001
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To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Global Sports, Inc. ("Global") will be held on Thursday, May 24,
2001, at 10:00 a.m. local time, at the office of Global, 1075 First Avenue,
King of Prussia, PA 19406, for the following purposes:
1. To elect seven directors, as more fully described in the accompanying
Proxy Statement;
2. To approve an amendment to Global's 1996 Equity Incentive Plan to (i)
increase the number of shares of Global's common stock, par value $.01 per
share ("Common Stock"), issuable under the Plan from 4,500,000 shares to
7,500,000 shares, and (ii) increase the number of shares which may be
granted to employees covered by Section 162(m) of the Internal Revenue Code
of 1986, as amended, to 1,000,000;
3. To approve the amendment and restatement of Global's Certificate of
Incorporation in the form attached as Appendix B to the Proxy Statement to
(i) increase the number of authorized shares of Common Stock by 30,000,000
shares from 60,000,000 shares to 90,000,000 shares, (ii) increase the
number of authorized shares of Preferred Stock by 4,000,000 shares from
1,000,000 shares to 5,000,000 shares, and (iii) make certain other changes
to the Certificate, all as more fully described in the Proxy Statement; and
4. To act upon such other business as may properly come before the Annual
Meeting or any postponement or adjournment thereof.
The Board of Directors is not aware of any other business to come before the
Annual Meeting.
The Board of Directors has fixed March 30, 2001 as the record date for the
determination of shareholders entitled to vote at the Annual Meeting. Only
shareholders of record at the close of business on that date will be entitled
to notice of, and to vote at, the Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors,
Arthur H. Miller
Secretary
King of Prussia, Pennsylvania
April 30, 2001
Global Sports, Inc.
1075 First Avenue
King of Prussia, PA 19406
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PROXY STATEMENT
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The accompanying Proxy is solicited by and on behalf of the Board of
Directors of Global Sports, Inc. ("Global" or the "Company") for the Annual
Meeting of Shareholders (the "Annual Meeting") to be held on Thursday, May 24,
2001, at 10:00 a.m. local time, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders, and at any postponement or
adjournment thereof. The Annual Meeting will be held at the office of Global,
1075 First Avenue, King of Prussia, PA 19406. Unless the context requires
otherwise, all references herein to Global refer to Global Sports, Inc. and
its subsidiaries. This Proxy Statement, the Notice of Annual Meeting and the
Proxy are first being mailed to shareholders on or about April 30, 2001.
The cost of soliciting proxies will be borne by Global. In addition to
solicitation by mail, proxies may be solicited in person or by telephone,
telegraph or fax by directors, officers or employees of Global without
additional compensation. Upon request by brokers, dealers, banks or voting
trustees, or their nominees who are record holders of Global Common Stock,
Global will pay the reasonable expenses incurred by such record holders for
mailing proxy materials to any beneficial owners of the Common Stock.
Record Date and Quorum Record Date and Quorum
Only shareholders of record at the close of business on March 30, 2001 (the
"Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. As of the Record Date, Global had 31,427,752 shares of Common Stock
issued and outstanding and 800 shares of Series A Preferred Stock issued and
outstanding. Each share of Common Stock outstanding is entitled to one vote on
each matter which may be brought before the Annual Meeting. The shares of
Series A Preferred Stock outstanding have no voting rights with respect to any
matter which may be brought before the Annual Meeting.
In order for a quorum to be present at the Annual Meeting, a majority of the
outstanding shares of Global Common Stock as of the close of business on the
Record Date must be present in person or represented by proxy at the Annual
Meeting. All such shares that are present in person or represented by proxy at
the Annual Meeting including abstentions and broker non-votes will be counted
in determining whether a quorum is present.
Voting of Shares Voting of Shares
A Proxy is enclosed. If properly executed and received in time for voting,
and not revoked, the enclosed Proxy will be voted in accordance with the
instructions indicated by the shareholders. If no instructions to the contrary
are indicated, the persons named in the enclosed Proxy will vote all shares of
Common Stock represented by such Proxy:
(i) FOR election of all nominees for director named in this Proxy
Statement;
(ii) FOR approval of the amendment to Global's 1996 Equity Incentive Plan
to (A) increase the number of shares of Common Stock issuable under the
Plan from 4,500,000 shares to 7,500,000 shares, and (B) increase the number
of shares which may be granted to employees covered by Section 162(m) of
the Internal Revenue Code of 1986, as amended, to 1,000,000;
(iii) FOR approval of the amendment and restatement of Global's
Certificate of Incorporation in the form attached as Appendix B to this
Proxy Statement to (A) increase the number of authorized shares of Common
Stock by 30,000,000 shares from 60,000,000 shares to 90,000,000 shares, (B)
increase the number of authorized shares of Preferred Stock by 4,000,000
shares from 1,000,000 shares to 5,000,000 shares, and (C) make certain
other changes to the Certificate of Incorporation, as described in this
Proxy Statement; and
1
(iv) in the discretion of the persons named in the enclosed Proxy as to
any other matter that may properly come before the Annual Meeting.
The election of directors will be determined by a plurality vote. The
affirmative vote of a majority of the shares of Common Stock outstanding on
the Record Date is required to approve the amendment of Global's Certificate
of Incorporation. The affirmative vote of a majority of the shares of Common
Stock present or represented by proxy at the Annual Meeting is required to
approve the amendment of Global's 1996 Equity Incentive Plan. An abstention,
withholding of authority to vote or broker non-vote on any proposal, other
than the election of directors, will have the same legal effect as an
"against" vote.
Revocation of Proxies Revocation of Proxies
Sending in a signed Proxy will not affect the shareholder's right to attend
the Annual Meeting and vote in person since the Proxy is revocable. Any
shareholder giving a Proxy has the power to revoke it by delivering a later
dated Proxy or giving written notice to the Secretary of Global at any time
before the Proxy is exercised. Attendance at the Annual Meeting will not, by
itself, revoke a Proxy.
Change in Fiscal Year End
For all years prior to 1999, Global's fiscal year ended on December 31.
Effective for 1999, Global changed its fiscal year from the last day of
December to the Saturday nearest the last day of December. As used in this
Proxy Statement, "fiscal 1996", "fiscal 1997", "fiscal 1998", "fiscal 1999"
and "fiscal 2000" refer to Global's fiscal years ended December 31, 1996,
December 31, 1997, December 31, 1998, January 1, 2000 and December 30, 2000,
respectively, and "fiscal 2001" refers to Global's fiscal year ending December
29, 2001.
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PROPOSAL 1--ELECTION OF DIRECTORS
Global's Bylaws, as amended, provide that the number of directors shall be
as established by the Board of Directors. The Board of Directors has set the
number of directors at seven. The following table sets forth certain
information regarding the nominees for election to the Board of Directors to
serve for one-year terms until the 2002 Annual Meeting and until their
respective successors are elected and qualified.
Position(s) Held Director Term to
Name Age(1) in the Company Since Expire
- ------------------- ------ ----------------------- -------- -------
Michael G. Rubin 28 Chairman, President and 1995 2002
Chief Executive Officer
Kenneth J. Adelberg 48 Director 1995 2002
Ronald D. Fisher 53 Director 2000 2002
Harvey Lamm 65 Director 1998 2002
Mark S. Menell 36 Director 2000 2002
Michael S. Perlis 48 None N/A 2002
Jeffrey F. Rayport 41 Director 1999 2002
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(1) As of March 30, 2001.
The principal occupation of each nominee for election to the Board of
Directors is set forth below.
Michael G. Rubin has served as Global's Chairman of the Board and Chief
Executive Officer since July 1995 and as Global's President since June 2000.
Mr. Rubin was named Entrepreneur of the Year in 1994 and 2000 at the Greater
Philadelphia Entrepreneur of the Year Awards sponsored by Ernst & Young. Mr.
Rubin attended Villanova University, Villanova, Pennsylvania.
Kenneth J. Adelberg has been one of Global's directors since July 1995. Mr.
Adelberg has served as President and Chief Executive Officer of HiFi House
Group of Companies, a privately-held company based in Broomall, Pennsylvania,
since 1987. Mr. Adelberg is a director and founding stockholder of US Wats,
Inc., a publicly-traded company specializing in business telecommunications
services, located in Bala Cynwyd, Pennsylvania, which was established in 1989.
Mr. Adelberg is a founding stockholder and director of Republic Bank,
Philadelphia, Pennsylvania, a publicly-traded bank which has been in operation
since 1989. Mr. Adelberg is also a director of Trackpower, Inc. Mr. Adelberg
holds Bachelor of Science degrees in Biophysics and Physiological Psychology
from Pennsylvania State University and attended the MBA program at Drexel
University, Philadelphia, Pennsylvania.
Ronald D. Fisher has been one of Global's directors since March 2000. Mr.
Fisher currently serves as the Vice Chairman of SOFTBANK Holdings, Inc. and
Chief Executive Officer of SOFTBANK Global Ventures, a global private equity
organization. He joined SOFTBANK in October 1995. From January 1990 to
September 1995, Mr. Fisher was chief executive officer of Phoenix
Technologies, Ltd., a developer and marketer of system software products. Mr.
Fisher is also a director of SOFTBANK Corporation, E*TRADE Group, Inc., InsWeb
Corporation, Key3media Group, Inc., PeoplePC, Inc and OptiMark Technologies.
Mr. Fisher received a Bachelor of Commerce degree from the University of
Witwatersand in South Africa and an MBA from Columbia University.
Harvey Lamm has been one of Global's directors since April 1998. Mr. Lamm
has served as a director and Chief Executive Officer of Vintek Corporation, a
privately-held company based in Philadelphia, Pennsylvania since 1996. Vintek
specializes in automated title management and the development of tools to
reduce cost and manage risk for automotive finance institutions. From 1990 to
1996, Mr. Lamm spent his time managing his
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investments. From 1967 until 1990, Mr. Lamm served as Chairman of the Board,
Chief Executive Officer, President and Chief Operating Officer of Subaru of
America, Inc., until its acquisition by Fuji Heavy Industries Ltd. Mr. Lamm
helped found Subaru of America, which was the exclusive importer of Subaru
brand vehicles in the United States and was a publicly traded company listed
on the Nasdaq National Market. Mr. Lamm holds degrees from Pennsylvania State
University and Drexel University.
Mark S. Menell has been one of Global's directors since April 2000. Mr.
Menell has been a partner of Rustic Canyon Ventures since January 2000. From
August 1990 to January 2000, Mr. Menell was an investment banker at Morgan
Stanley Witter, most recently as Principal and co-head of Morgan Stanley Dean
Witter's Technology Mergers and Acquisitions Group, based in Menlo Park, CA.
Mr. Menell received a B.A. magna cum laude in economics from the University of
Pennsylvania and a B.S. magna cum laude in finance and an MBA from the
University of Pennsylvania's Wharton School of Business.
Michael S. Perlis has been Venture Partner of SOFTBANK Capital Partners LP
since July 2000. From November 1998 to June 2000, Mr. Perlis was employed by
Ziff-Davis Inc., most recently as President & Chief Executive Officer. While
at Ziff-Davis, Mr. Perlis was responsible for the portfolio of Ziff-Davis
owned and licensed titles. From June 1996 to October 1998, Mr. Perlis served
as President, Chief Operating Officer and Partner of TVSM Inc., a publisher of
system specific television listing and guidance publications. Mr. Perlis
received a B.A. from Syracuse University.
Dr. Jeffrey F. Rayport has been one of Global's directors since April 1999.
Dr. Rayport has been executive director of the Monitor Marketspace Center, a
technology and e-commerce media unit based at Monitor Company, a global
strategy consulting firm headquartered in Cambridge, Massachusetts, since
September, 1998. Dr. Rayport has also been a faculty member in the Service
Management Interest Group at the Harvard Business School since prior to 1995.
Dr. Rayport went on leave from the Harvard Business School in September, 1998.
Dr. Rayport earned an A.B. from Harvard College, an M.Phil. in International
Relations at the University of Cambridge and an A.M. in the History of
American Civilization and a Ph.D. in Business History at Harvard University.
The stock purchase agreements pursuant to which certain funds affiliated
with SOFTBANK America Inc. ("SOFTBANK") acquired their shares of Global Common
Stock provide that SOFTBANK has the right to designate up to three members of
Global's Board of Directors, depending on the number of shares of Global
Common Stock held by SOFTBANK. Additionally, one of the SOFTBANK directors
will be entitled to serve as a member of each committee of the Board of
Directors. Ronald D. Fisher and Charles R. Lax were elected as directors of
Global at the 2000 Annual Meeting to serve as SOFTBANK nominees. Messrs.
Fisher and Perlis are the SOFTBANK nominees for election to the Board of
Directors at the 2001 Annual Meeting. The stock purchase agreement pursuant to
which Rustic Canyon Ventures, L.P., f/k/a TMCT Ventures, L.P. ("Rustic
Canyon") acquired its shares of Global Common Stock provides that Rustic
Canyon has the right to designate one member of Global's Board of Directors.
Mark S. Menell was elected as director of Global to serve as Rustic Canyon's
nominee. The stock purchase agreement pursuant to which Interactive Technology
Holdings, LLC ("ITH") acquired its shares of Global Common Stock provides that
ITH has the right to designate up to two members of Global's Board of
Directors, depending on the number of shares of Global Common Stock held by
ITH. Additionally, one of the ITH directors will be entitled to serve as a
member of each committee of the Board of Directors. ITH has not designated any
members of Global's Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
NOMINEES FOR DIRECTORS.
Board, Committees and Attendance at Meetings
The Board of Directors of Global held 11 meetings during fiscal 2000. During
fiscal 2000, no director attended fewer than 75% of the aggregate of (i) the
total number of Board meetings held during the period for which he was a
director and (ii) the total number of meetings held by committees of the Board
of Directors on which he served, during the period he served, except that Mr.
Rayport was unable to attend four Board meetings and two of the eight meetings
held by committees of the Board on which he served and Mr. Fisher was unable
4
to attend six of the nine Board meetings held during the period he served as
director. The following is a description of each of the committees of the
Board of Directors of Global.
Audit Committee. During fiscal 2000, members of the Audit Committee were
Messrs. Adelberg and Lamm and Charles R. Lax. The Audit Committee reviews
Global's audited financial statements and the independence of the independent
auditors and makes recommendations to the Board of Directors concerning
Global's accounting practices and policies and the selection of independent
accountants. The responsibilities of the Audit Committee are described in the
Audit Committee Charter adopted by the Audit Committee and the Board of
Directors, a copy of which is attached as Appendix C to this Proxy Statement.
Each member of the Audit Committee is independent, as defined in Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards. The Audit Committee held seven meetings during fiscal 2000.
Compensation Committee. During fiscal 2000, members of the Compensation
Committee were Messrs. Adelberg, Lax and Rayport. The Compensation Committee
is responsible for establishing salaries, bonuses and other compensation for
the executive officers and administers Global's stock option plans. The
Compensation Committee held three meetings during fiscal 2000.
Compensation of Directors
Under Global's current policy, upon election to the Board of Directors, non-
employee directors of Global receive an option to purchase 30,000 shares of
Global Common Stock as compensation for their services to Global. The
directors do not receive any cash compensation for their services on behalf of
Global but are reimbursed for reasonable travel and lodging expenses incurred
in attending meetings of the Board of Directors and any Committee. Mr. Rubin,
the only director who is also an officer of Global, does not receive any
separate fee for acting in his capacity as a director.
On September 19, 1995, the Board of Directors adopted, and on November 15,
1995, the shareholders approved, the 1995 Non-Employee Directors' Stock Plan
(the "Directors' Plan"). Pursuant to the Directors' Plan, options originally
could be granted with respect to an aggregate of 12,500 shares of Common
Stock. Effective December 31, 1997, the Board of Directors terminated the
Directors' Plan, which remains in effect only as to unexercised options
granted under the Directors' Plan.
Audit Committee Report
The Audit Committee serves as an independent and objective party to monitor
Global's financial reporting process and internal control system. The Audit
Committee reviews and appraises the audit efforts of Global's independent
accountants and financial management, including internal auditing, if
applicable, and provides an open avenue of communication among the independent
accountants, financial and senior management and the Board of Directors. Each
member of the Audit Committee is independent, as defined in Rule 4200(a)(15)
of the National Association of Securities Dealers' listing standards. The
Board of Directors adopted a written charter for the Audit Committee on June
14, 2000, which is attached to this Proxy Statement as Appendix C.
The Audit Committee has reviewed and discussed the audited financial
statements with Global's management. The Audit Committee has also discussed
with Deloitte & Touche LLP, the Company's independent auditors, the matters
required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees." The Audit Committee has received the
disclosures from Deloitte & Touche LLP required by Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees," and
has discussed with Deloitte & Touche LLP their independence. Based upon the
review and discussions referred to above, the Audit Committee recommended to
the Board of Directors of Global that the audited financial statements be
included in Global's Annual Report on Form 10-K for fiscal 2000 for filing
with the Securities and Exchange Commission.
Kenneth J. Adelberg
Harvey Lamm
Charles R. Lax
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of April 12, 2001, the beneficial
ownership of Global Common Stock by: (i) each person known by Global to be the
beneficial owner of five percent or more of Global's outstanding Common Stock,
(ii) each director and nominee for director of Global, (iii) each executive
officer of Global who is named in the Summary Compensation Table below (the
"Named Officers"), and (iv) the directors and executive officers of Global as
a group. Unless otherwise specified, all persons listed below have sole voting
and investment power with respect to their shares. The business address of the
officers and directors of Global is that of Global.
Name, Position and Address Number of Shares Percentage
of Beneficial Owner Beneficially Owned(1) of Class
-------------------------- --------------------- ----------
Michael G. Rubin
Chairman, President and
Chief Executive Officer..................... 8,067,096 25.7%
Jordan M. Copland (2)
Executive Vice President and
Chief Financial Officer..................... 75,416 *
Robert W. Liewald (3)
Executive Vice President,
Merchandising............................... 160,550 *
Arthur H. Miller (4)
Executive Vice President and
General Counsel............................. 116,343 *
Michael R. Conn (5)
Senior Vice President,
Business Development........................ 97,250 *
Kenneth J. Adelberg (6)
Director.................................... 101,900 *
Ronald D. Fisher (7)
Director.................................... 9,922,600 30.4
Harvey Lamm (8)
Director.................................... 137,260 *
Charles R. Lax (9)
Director.................................... 9,922,600 30.4
Mark S. Menell (10)
Director.................................... 1,095,650 3.5
Jeffrey F. Rayport (11)
Director.................................... 22,500 *
Michael S. Perlis (12)
Director Nominee............................ 9,903,850 30.3
Interactive Technology Holdings, LLC (13).... 9,500,000 26.4
SOFTBANK Affiliates (14)..................... 9,903,850 30.3
All executive officers and directors as a
group (14 persons) (15)..................... 19,982,577 59.2
- --------
* Less than one percent
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the SEC. Accordingly, they may include securities owned by
or for, among others, the wife and/or minor children of the individual
and any other relative who has the same home as such individual, as well
as other securities as to which the individual has or shares voting or
investment power or has the right to acquire under outstanding stock
options within 60 days of the date of this table. Beneficial ownership
may be disclaimed as to certain of the securities.
(2) Includes 72,916 shares of Common Stock issuable upon the exercise of
options.
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(3) Includes 93,750 shares of Common Stock issuable upon the exercise of
options and 10,000 shares of Common Stock issuable upon the exercise of
warrants.
(4) Includes 105,208 shares of Common Stock issuable upon the exercise of
options.
(5) Includes 95,250 shares of Common Stock issuable upon the exercise of
options.
(6) Includes 56,250 shares of Common Stock issuable upon the exercise of
options.
(7) Consists of (i) 18,750 shares of Common Stock issuable to Mr. Fisher
upon the exercise of options; (ii) 8,533,792 shares of Common Stock held
by SOFTBANK Capital Partners LP; (iii) 120,058 shares of Common Stock
held by SOFTBANK Capital Advisors Fund LP; (iv) 1,232,125 shares of
Common Stock issuable to SOFTBANK Capital Partners LP upon the exercise
of warrants; and (v) 17,875 shares of Common Stock issuable to SOFTBANK
Capital Advisors Fund LP upon the exercise of warrants. Mr. Fisher is a
Managing Director of the general partner of each of these SOFTBANK
entities. Mr. Fisher disclaims beneficial ownership of these shares,
except to the extent of his pecuniary interest.
(8) Includes 125,000 shares of Common Stock issuable upon the exercise of
options.
(9) Consists of (i) 18,750 shares of Common Stock issuable to Mr. Lax upon
the exercise of options; (ii) 8,533,792 shares of Common Stock held by
SOFTBANK Capital Partners LP; (iii) 120,058 shares of Common Stock held
by SOFTBANK Capital Advisors Fund LP; (iv) 1,232,125 shares of Common
Stock issuable to SOFTBANK Capital Partners LP upon the exercise of
warrants; and (v) 17,875 shares of Common Stock issuable to SOFTBANK
Capital Advisors Fund LP upon the exercise of warrants. Mr. Lax is a
Managing Director of the general partner of each of these SOFTBANK
entities. Mr. Lax disclaims beneficial ownership of these shares, except
to the extent of his pecuniary interest.
(10) Consists of (i) 18,750 shares of Common Stock issuable upon the exercise
of options; (ii) 764,400 shares of Common Stock held by Rustic Canyon;
and (iii) 312,500 shares of Common Stock issuable to Rustic Canyon upon
the exercise of warrants. Mr. Menell is a Partner of Rustic Canyon. Mr.
Menell disclaims beneficial ownership of these shares, except to the
extent of his pecuniary interest.
(11) Consists of 22,500 shares of Common Stock issuable upon the exercise of
options.
(12) Consists of (i) 8,533,792 shares of Common Stock held by SOFTBANK
Capital Partners LP; (ii) 120,058 shares of Common Stock held by
SOFTBANK Capital Advisors Fund LP; (iii) 1,232,125 shares of Common
Stock issuable to SOFTBANK Capital Partners LP upon the exercise of
warrants; and (iv) 17,875 shares of Common Stock issuable to SOFTBANK
Capital Advisors Fund LP upon the exercise of warrants. Mr. Perlis is
Venture Partner of SOFTBANK Capital Partners LP. Mr. Perlis disclaims
beneficial ownership of these shares, except to the extent of his
pecuniary interest.
(13) Includes 4,500,000 shares of Common Stock issuable upon the exercise of
warrants. The business address of Interactive Technology Holdings, LLC
is c/o QVC, Inc., Studio Park, West Chester, PA 19380.
(14) Consists of (i) 8,533,792 shares of Common Stock held by SOFTBANK
Capital Partners LP; (ii) 120,058 shares of Common Stock held by
SOFTBANK Capital Advisors Fund LP; (iii) 1,232,125 shares of Common
Stock issuable to SOFTBANK Capital Partners LP upon the exercise of
warrants; and (iv) 17,875 shares of Common Stock issuable to SOFTBANK
Capital Advisors Fund LP upon the exercise of warrants. The business
address of SOFTBANK is 10 Langley Road, Suite 403, Newtown Center, MA
02159.
(15) Includes (i) an aggregate of 994,727 shares of Common Stock issuable
upon the exercise of options held by all executive officers and
directors as a group; (ii) an aggregate of 10,000 shares of Common Stock
issuable upon the exercise of warrants held by all executive officers
and directors as a group; (iii) 8,533,792 shares of Common Stock held by
SOFTBANK Capital Partners LP; (iv) 120,058 shares of Common Stock held
by SOFTBANK Capital Advisors Fund LP; (v) 764,400 shares of Common Stock
held by Rustic Canyon; (vi) 1,232,125 shares of Common Stock issuable to
SOFTBANK Capital Partners LP upon the exercise of warrants; (vii) 17,875
shares of Common Stock issuable to SOFTBANK Capital Advisors Fund LP
upon the exercise of warrants; and (viii) 312,500 shares of Common Stock
issuable to Rustic Canyon upon the exercise of warrants.
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PROPOSAL 2--APPROVAL OF AMENDMENT TO 1996 EQUITY INCENTIVE PLAN
Description of the Proposal
In March 1996, the Board of Directors adopted and in July 1996 Global's
shareholders approved Global's 1996 Equity Incentive Plan (the "Incentive
Plan"). The Incentive Plan currently permits Awards to be granted for a total
of 4,500,000 shares of Common Stock.
Effective January 4, 2001, the Board of Directors amended the Incentive Plan
to (i) increase the authorized number of shares of Common Stock issuable
thereunder by 3,000,000 shares and to reserve the additional shares for
issuance under the Incentive Plan, bringing the total number of shares of
Common Stock issuable under the Incentive Plan to 7,500,000, and (ii) increase
the number of shares which may be granted to employees covered by Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), to
1,000,000. The Incentive Plan, as amended and restated in its entirety, is
included as Appendix A to this Proxy Statement.
Approval of the amendment to the Incentive Plan will require the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
present or represented at the Annual Meeting. Proxies for which no specific
direction is included will be voted for the amendment to the Incentive Plan.
Description of the 1996 Equity Incentive Plan
The following summary of the Incentive Plan is qualified in its entirety by
the specific language of the Incentive Plan, a copy of which is available to
any shareholder upon request.
General
The purposes of the Incentive Plan are to attract and retain key employees
and certain other persons who are in a position to make significant
contributions to the success of Global, to reward these employees and other
persons for their contributions, to provide additional incentive to these
employees and other persons to continue making similar contributions and to
further align the interests of these employees and other persons with those of
Global's shareholders. To achieve these purposes, the Incentive Plan permits
grants of incentive stock options ("ISO's"), options not intended to qualify
as incentive stock options ("Non-ISO's"), stock appreciation rights ("SAR's"),
restricted and unrestricted stock awards, performance awards, loans, and
supplemental cash awards and combinations of the foregoing (all referred to as
"Awards"). Shares issuable under Awards that terminate unexercised, shares
issuable under Awards that are payable in stock or cash but are paid in cash
and shares issued but later forfeited will be available for future Awards
under the Incentive Plan.
Eligibility
All of Global's approximately 450 current employees, future employees of
Global and other persons who, in the opinion of the Board of Directors, are in
a position to make significant contributions to the success of Global, such as
consultants and non-employee directors, are eligible to receive Awards under
the Incentive Plan.
Administration
The Incentive Plan is administered by the Board of Directors, which
determines, among other things and subject to certain conditions, the persons
eligible to receive Awards, the persons who actually receive Awards, the type
of each Award, the number of shares of Common Stock subject to each Award, the
date of grant, exercise schedule, vesting schedule and other terms and
conditions of each Award, whether to accelerate the exercise or vesting
schedule or waive any other terms or conditions of each Award, whether to
amend or cancel an Award and the form of any instrument used under the
Incentive Plan. The Board of Directors has the right to adopt rules for the
administration of the Incentive Plan, settle all controversies regarding the
Incentive Plan or any Award, and construe and correct defects and omissions in
the Incentive Plan or any Award. The Incentive Plan may be amended, suspended
or terminated by the Board of Directors, subject to certain conditions,
provided
8
that shareholder approval will be required whenever necessary for the
Incentive Plan to continue to satisfy the requirements of certain securities
and tax laws, rules and regulations. The Board of Directors may delegate its
authority under the Incentive Plan to a Committee of the Board. The Board of
Directors has delegated this authority to the Compensation Committee of the
Board.
Options
Recipients of stock options under the Incentive Plan will have the right to
purchase shares of Common Stock at an exercise price, during a period of time
and on such other terms and conditions as are determined by the Board of
Directors. For ISO's, the recipient must be an employee, the exercise price
must be at least 100% (110% if issued to a greater than 10% shareholder of
Global) of the fair market value of Global Common Stock on the date of grant
and the term cannot exceed ten years (five years if issued to a greater than
10% shareholder of Global) from date of grant. If permitted by the Board of
Directors and subject to certain conditions, an option exercise price may be
paid by delivery of shares of Global Common Stock that have been outstanding,
a promissory note, a broker's undertaking to promptly deliver the necessary
funds or by a combination of those methods. If permitted by the Board of
Directors, options (other than those granted in tandem with SAR's) may be
settled by Global paying to the recipient, in cash or shares of Common Stock
(valued at the then fair market value of Global Common Stock), an amount equal
to such fair market value minus the exercise price of the option shares. No
employee covered by Section 162(m) of the Code, will be eligible to receive
options covering more than 1,000,000 shares of Common Stock during any
calendar year.
Stock Appreciation Rights
SARs may be granted under the Incentive Plan either alone or in tandem with
stock options. Generally, recipients of SARs are entitled to receive upon
exercise, cash or shares of Common Stock (valued at the then fair market value
of Global Common Stock) equal to such fair market value on the date of
exercise minus such fair market value on the date of grant of the shares
subject to the SAR, although certain other measurements also may be used. A
SAR granted in tandem with a stock option is exercisable only if and to the
extent that the option is exercised.
Stock Awards
The Incentive Plan provides for restricted and unrestricted stock awards.
Stock awards allow the recipient to acquire shares of Global Common Stock for
their par value or any higher price determined by the Board of Directors. In
the case of restricted stock awards, the shares acquired are subject to a
vesting schedule and other possible conditions determined by the Board of
Directors.
Performance Awards
The Incentive Plan provides for performance awards entitling the recipient
to receive stock options, stock awards or other types of Awards conditional
upon achieving performance goals determined by the Board of Directors.
Performance goals may involve overall corporate performance, operating group
or business unit performance, personal performance or any other category of
performance determined by the Board of Directors. Financial performance may be
measured by revenue, operating income, net income, earnings per share, Common
Stock price, price-earnings multiple or other financial factors determined by
the Board of Directors.
Loans and Cash Awards
Under the Incentive Plan, loans or supplemental cash awards may be granted
to recipients of Awards to help defray taxes due as a result of the Awards.
The terms and conditions of loans and supplemental cash awards, including the
interest rate, which may be zero, and whether any loan will be forgiven, are
determined by the Board of Directors.
9
Termination of Awards
Except as otherwise determined by Global, upon termination of a recipient's
employment or other relationship with Global, (i) stock options and SARs
remain exercisable for a period of three months (one year if termination is
due to death or disability) to the extent that they were exercisable at the
time of termination and (ii) unvested shares under outstanding restricted
stock awards vest immediately, except in the case of a voluntary resignation
or termination for cause (as defined in the Incentive Plan). Stock options,
SAR's and other Awards that are not exercisable at the time of termination
automatically terminate, and payments or benefits under deferred stock awards,
performance awards and supplemental cash awards that are not irrevocably due
at the time of termination are forfeited.
Summary of Federal Income Tax Consequences
This discussion, which is based upon federal income tax law as in effect on
the date of this Proxy Statement generally summarizes certain federal income
tax consequences associated with the Incentive Plan. The tax consequences to
executive officers may be different from those summarized below. No taxable
income is realized upon the grant of a stock option, nor upon the exercise of
an ISO except to the extent that the exercise may result in alternative
minimum tax liability. Upon the exercise of a non-qualified option, the
recipient realizes ordinary income equal to the fair market value on the date
of exercise minus the exercise price of the option shares. If restricted
shares of Global Common Stock are used to settle a stock option, however, then
the realization of income may be deferred. Upon a disposition of shares
acquired by exercise of a stock option, the gain or loss generally constitutes
a capital gain or loss. In the case of a disposition of ISO shares within one
year after the date of exercise or within two years after the date of grant,
the difference between the lesser of (i) the amount realized on disposition
and (ii) the fair market value on the date of exercise and the exercise price
constitutes ordinary income, and any additional gain or loss above or below
the fair market value on the date of exercise constitutes a capital gain or
loss.
Upon the grant of an unrestricted stock award, the recipient realizes
ordinary income equal to the fair market value on the date of grant minus the
price paid for the shares awarded. A recipient of a restricted stock award
realizes ordinary income only as of and when the shares vest. The ordinary
income realized on each vesting or transfer date equals the fair market value
on that date less the price paid for the shares. A recipient of a restricted
stock award may, however, choose or be required by the terms of the award to
elect under Section 83(b) of the Code to have the ordinary income associated
with all of the restricted shares realized and measured on the date of grant.
A recipient who makes such an election and later forfeits restricted shares
may not claim a loss for tax purposes. The tax consequences of a performance
award depend upon the nature of the underlying Award earned if and when the
performance goals are achieved. Generally, loans made under the Incentive Plan
do not result in taxable income to the recipient. If the interest rate is
lower than certain rates specified under the Code, however, then ordinary
income may be imputed to the recipient. Forgiveness of all or part of a loan
also results in ordinary income to the recipient. The recipient of a
supplemental cash award realizes ordinary income equal to the amount received.
Generally, whenever a recipient realizes ordinary income, a corresponding
deduction is available to Global. Under Section 162(m) of the Code, however,
Global will be denied a deduction for certain compensation exceeding
$1,000,000 paid to its chief executive officer and four other highest paid
executive officers, excluding (among other things) certain performance-based
compensation (see Report of the Compensation Committee).
10
New Plan Benefits
The following table sets forth the number of shares issuable upon the exercise
of options and stock awards granted under the Incentive Plan during fiscal
2000.
Number of
Name and Position Units
---------------------------------------------------------------- ---------
Michael G. Rubin
Chairman, President and
Chief Executive Officer........................................ --
Jordan M. Copland
Executive Vice President
and Chief Financial Officer.................................... --
Robert W. Liewald
Executive Vice President,
Merchandising.................................................. 25,000
Arthur H. Miller
Executive Vice President
and General Counsel............................................ 50,000
Michael R. Conn
Senior Vice President,
Business Development........................................... 70,000
Executive Group................................................. 420,000
Non-Executive Director Group.................................... 60,000
Non-Executive Officer Employee Group............................ 2,378,309
THE BOARD OF DIRECTORS OF GLOBAL UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR APPROVAL OF THE AMENDMENT TO GLOBAL'S 1996 EQUITY INCENTIVE PLAN.
11
PROPOSAL 3--AMENDMENT TO CERTIFICATE OF INCORPORATION
Under Global's Certificate of Incorporation, Global currently is authorized
to issue up to 60,000,000 shares of Common Stock and 1,000,000 shares of
Preferred Stock. As of March 30, 2001, there were approximately 14,756,329
authorized shares of Global Common Stock that were not issued or reserved for
future issuance and 999,200 shares of Global Preferred Stock that were not
issued or reserved for future issuance. On , 2001, the Board of
Directors approved an amendment to Global's Certificate of Incorporation that
(i) increases the maximum number of authorized shares of Common Stock by
30,000,000 from a total of 60,000,000 shares to a total of 90,000,000 shares,
(ii) increases the maximum number of authorized shares of Preferred Stock by
4,000,000 from a total of 1,000,000 shares to a total of 5,000,000 shares, and
(iii) makes certain changes with respect to the management of the business and
the conduct of the affairs of Global. The Certificate of Incorporation, as
proposed to be amended and restated in its entirety, is attached as Appendix B
to this Proxy Statement.
The purpose of the increases in the authorized shares of Common Stock and
Preferred Stock is to provide sufficient shares for future financings,
acquisitions, benefit plans, recapitalizations and other corporate purposes.
Although Global evaluates such uses from time to time, Global currently does
not have any commitments or understandings that would require the issuance of
additional shares. Once authorized, the additional shares of Common Stock and
Preferred Stock may be issued with approval of the Board of Directors but
without further approval of the shareholders unless shareholder approval is
required by applicable law, rule or regulation. Accordingly, this solicitation
may be the only opportunity for shareholders to approve such financings,
acquisitions, benefit plans, recapitalizations and other corporate
transactions.
The Certificate of Incorporation, as proposed to be amended and restated,
makes the following changes with respect to the management of the business and
the conduct of the affairs of Global: (i) the number of directors will be
fixed exclusively by a majority of the authorized number of directors
constituting the Board of Directors; (ii) no decrease in the number of
directors will shorten the term of any incumbent director; (iii) directors may
be removed with cause by the vote of a majority of the voting power of all the
then-outstanding shares of Global entitled to vote for directors or without
cause by the vote of 66 2/3% of the voting power of all the then-outstanding
shares of Global entitled to vote for directors; (iv) notice of shareholder
nominations for election of directors and of business to be brought by
shareholders before a meeting of shareholders must be given in the manner
provided in Global's Bylaws; and (v) if the Delaware General Corporation Law
is amended to further eliminate or limit personal liability of directors, the
liability of a director will be limited to the fullest extent permitted by
that law, as amended.
Shareholder approval of this proposal is required under Delaware law.
Approval of the amendment to Global's Certificate of Incorporation requires
the affirmative vote of the holders of a majority of the outstanding shares of
Global Common Stock.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE AMENDMENT TO
GLOBAL'S CERTIFICATE OF INCORPORATION.
EXECUTIVE COMPENSATION
Compensation Committee Report
During fiscal 2000, Global's Compensation Committee of the Board of
Directors was comprised of Messrs. Adelberg, Lax and Rayport. For fiscal 2000,
the Compensation Committee reviewed the compensation of executive officers,
made decisions regarding executive compensation and administered Global's
employee equity incentive plans.
Global's compensation policies for executive officers are to:
. provide compensation packages to attract, motivate and retain
executives,
12
. link a significant portion of compensation to financial results to
reward successful performance, and
. provide long-term equity based compensation to further align the
interests of executives with those of the shareholders and further
reward success and performance.
The principal components of Global's executive compensation are base salary,
incentive compensation and periodic grants of stock options or awards. The
award of bonuses and stock options serve as incentives for superior
performance and are based upon both the performance of the executives and
Global.
In determining compensation levels, Global considers compensation packages
offered by similar sized companies within the e-commerce industry.
Compensation levels for individual executive officers may be more or less than
those offered by such other companies, depending on a subjective assessment of
individual factors, such as the executive's position, skills, achievements,
tenure with Global and historical compensation levels.
Global has employment agreements with the following Named Officers: Michael
G. Rubin, Global's Chairman, President and Chief Executive Officer, Jordan M.
Copland, Global's Executive Vice President and Chief Financial Officer, Arthur
H. Miller, Global's Executive Vice President and General Counsel and Michal R.
Conn, Global's Senior Vice President, Business Development. Compensation of
the Named Officers for fiscal 2000 was determined in accordance with these
employment agreements as described herein. Mr. Rubin's compensation in fiscal
2000 consisted solely of the base salary provided for in his employment
agreement. Mr. Rubin's compensation was not based on Global's performance.
Under the stock option plans established by Global, stock options are
periodically granted to employees at the discretion of the Board of Directors
or Compensation Committee. It is contemplated that executives of Global will
be eligible to receive stock option grants, subject to individual performance
and the performance of Global as a whole.
During fiscal 2000, Global's Named Officers were granted a total of 345,000
options to purchase Common Stock at exercise prices ranging from $3.00 to
$4.313 per share.
Section 162(m) of the Code generally denies a deduction to any publicly held
company, such as Global, for certain compensation exceeding $1,000,000 paid in
any taxable year to the chief executive officer and the four other highest
paid executive officers, excluding, among other things, certain qualified
performance-based compensation. The Board of Directors has not yet recommended
any change to Global's executive compensation policies and plans as a result
of Section 162(m). The Compensation Committee has considered the impact of
Section 162(m) and believes that it will not have a material adverse effect on
Global in fiscal 2001.
Kenneth J. Adelberg
Charles R. Lax
Jeffrey Rayport
Compensation Committee Interlocks and Insider Participation
None of the members of the Board's Compensation Committee is or has been an
officer or employee of Global. Mr. Lax is a Managing Director of the general
partner of SOFTBANK Capital Partners LP and SOFTBANK Capital Advisors Fund LP,
the SOFTBANK affiliates through which SOFTBANK has acquired an aggregate of
8,653,850 shares of Global Common Stock and warrants to purchase an aggregate
of 1,250,000 shares of Global Common Stock.
13
Summary Compensation Table
The following table sets forth information regarding compensation paid by
Global and its subsidiaries to each Named Officer.
Long Term Compensation (1)
-----------------------------------------
Annual Compensation Awards
--------------------------------- ------------------------
Securities
Restricted Underlying
Name and Fiscal Other Annual Stock Options / All Other
Principal Position Year Salary Bonus Compensation(2) Award(s) (3) SARS (#) Compensation (4)
- ------------------------ ------ --------- ------- --------------- ------------ ---------- ----------------
Michael G. Rubin 2000 $ 375,400 -- -- -- -- $ 510
Chairman, President and 1999 450,000 -- -- -- -- 510
Chief Executive
Officer............... 1998 398,269 -- -- -- -- --
Jordan M. Copland 2000 125,769 47,500 -- -- 200,000 23,358
Executive Vice
President 1999 -- -- -- -- -- --
and Chief Financial
Officer............... 1998 -- -- -- -- -- --
Robert W. Liewald 2000 200,000 100,000 -- -- 25,000 4,318
Executive Vice
President, 1999 90,769 100,000 -- -- 105,000 170
Merchandising.......... 1998 -- -- -- -- -- --
Arthur H. Miller 2000 200,000 100,000 -- -- 50,000 3,846
Executive Vice
President 1999 40,385 25,000 $130,505(5) $149,900(6) 100,000 43
and General Counsel.... 1998 -- -- -- -- -- --
Michael R. Conn 2000 162,500 24,375 -- -- 70,000 498
Senior Vice President, 1999 133,269 45,000 -- 18,548(7) 80,000 306
Business Development... 1998 -- -- -- -- -- --
- --------
(1) Global did not grant any stock appreciation rights during the years
presented.
(2) Excludes perquisites and other personal benefits that do not, in the
aggregate, exceed $50,000 or 10% of each officer's total salary and
bonus.
(3) As of the end of fiscal 2000, there were 1,500 shares of Global
restricted stock outstanding, with a value of $8,297. Holders of
restricted stock are entitled to receive dividends, if any, paid to
holders of Global Common Stock.
(4) For fiscal 2000, consists of (i) Global's matching contributions under
its 401(k) Profit Sharing Plan in the amount of $3,051, $3,808 and $3,336
for Messrs. Copland, Liewald and Miller, respectively, (ii) insurance
premiums paid by Global with respect to term life insurance in the amount
of $510, $307, $510, $510 and $498 for Messrs. Rubin, Copland, Liewald,
Miller and Conn, respectively, and (iii) reimbursement of moving expenses
in the amount of $20,000 for Mr. Copland.
(5) Consists of amounts reimbursed during fiscal 1999 for the payment of
taxes.
(6) On August 9, 1999, Mr. Miller was granted a restricted stock award of
10,000 shares of Global Common Stock, vesting on the date of grant. The
amount set forth in the table is the market value of the award on the
date of grant, net of the amount paid by Mr. Miller.
(7) On February 24, 1999, Mr. Conn was granted a restricted stock award of
1,500 shares of Global Common Stock, vesting on February 24, 2001. The
amount set forth in the table is the market value of the award on the
date of grant, net of the amount paid by Mr. Conn.
14
Option/SAR Grants in Last Fiscal Year
The following table sets forth certain information regarding options to
purchase shares of Common Stock granted to the Named Officers during fiscal
2000. No SAR's were granted during fiscal 2000.
Potential Realized Value
at Assumed Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (1)
----------------------------------------------------------- -----------------------------------
Number of % of Total Market
Securities Options/SARs Price
Underlying Granted to Exercise on Date
Options/SARs Employees in or Base of Grant Expiration
Name Granted (#) Fiscal Year Price ($/Sh) (#/Sh) Date 5% ($) 10% ($) 0% ($)
- ------------------------- ------------ ------------ ----------- -------- ---------- ----------- ----------- -----------
Michael G. Rubin
Chairman, President and
Chief Executive Officer.. -- -- -- -- -- -- -- --
Jordan M. Copland
Executive Vice President
and Chief Financial Officer.. 200,000(2) 6.5% $ 3.00 $19.00 2/9/10 $ 5,589,820 $ 9,256,060 $ 3,200,000
Robert W. Liewald
Executive Vice
President,
Merchandising........... 25,000(3) .8% $4.313 $4.313 5/26/10 67,811 171,841 --
Arthur H. Miller
Executive Vice President
and General Counsel..... 50,000(4) 1.6% $4.313 $4.313 5/26/10 135,622 343,681 --
Michael R. Conn
Senior Vice President,
Business Development.... 70,000(5) 2.3% $4.313 $4.313 5/26/10 189,871 481,154 --
- --------
(1) Represents the difference between the market value of the Common Stock for
which the option may be exercised, assuming that the market value of the
Common Stock on the date of grant appreciates in value to the end of the
ten-year option term at annualized rates of 5%, 10% and 0% (only with
respect to options with an exercise price below the market value of the
Common Stock at the date of grant), respectively, and the exercise price
of the option. The rates of appreciation used in this table are prescribed
by regulation of the SEC and are not intended to forecast future
appreciation of the market value of the Common Stock.
(2) Such option vests as follows: 50,000 shares on February 9, 2001 and 4,167
shares monthly thereafter.
(3) Such option vests as follows: 6,250 shares on May 26, 2001 and 521 shares
monthly thereafter.
(4) Such option vests as follows: 12,500 shares on May 26, 2000 and 782 shares
monthly thereafter.
(5) Such option vests as follows: 17,500 shares on May 26, 2001 and 2,188
shares monthly thereafter.
15
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year End
Option/SAR Values
The following table sets forth information regarding options to purchase
shares of Common Stock exercised by the Named Officers during fiscal 2000
under Global's stock option plans and the values of options held by such
individuals at fiscal year end.
Value of
Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs at
Options/ SARs at Fiscal Year End
Shares Acquired Value Fiscal Year End Exercisable/
Name on Exercise(#) Realized($) Exercisable/Unexercisable Unexercisable (1)
- ------------------------ --------------- ---------- ------------------------- -----------------
Michael G. Rubin
Chairman, President and
Chief Executive
Officer................ -- -- -- --
Jordan M. Copland
Executive Vice
President
and Chief Financial
Officer................ -- -- -- / 200,000 -- / $506,200
Robert W. Liewald
Executive Vice
President,
Merchandising.......... -- -- 45,000 / 85,000 $0 / $30,450
Arthur H. Miller
Executive Vice
President
and General Counsel.... -- -- 51,301 / 98,699 $21,885 / $39,015
Michael R. Conn
Senior Vice President,
Business Development... -- -- 28,750 / 121,250 $0 / $85,260
- --------
(1) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the options granted based upon the closing
sales price per share of $5.531 at the end of fiscal 2000.
Employment Agreements
Michael G. Rubin. Effective January 1, 2001, Global entered into a new
employment agreement with Mr. Rubin for a term of four years, subject to
automatic annual extensions, to serve as Global's President and Chief
Executive Officer. Pursuant to the terms of the employment agreement, Mr.
Rubin is entitled to receive (i) an annual base salary of $325,000 during
fiscal 2001, increasing by $25,000 in each successive year, (ii) an annual
bonus in such amount and based upon the achievement of such goals as Mr. Rubin
and the Compensation Committee may determine, and (iii) other benefits similar
to those provided to Global's other officers.
Mr. Rubin's employment agreement may be terminated by Global with cause,
which is defined to include gross negligence or willful misconduct in the
performance of his duties under the agreement, willful breach of the agreement
or conviction of a felony. Mr. Rubin may terminate his employment with Global
for good reason, which is defined to include, among other things, demotion or
removal from his position or diminishment of his duties, reduction in base
salary or a material reduction in benefits, breach of the agreement by Global
or relocation of Mr. Rubin's principal place of employment. In the event of
termination by Global other than for cause or termination by Mr. Rubin for
good reason, Global will pay Mr. Rubin two years of his base salary, in
accordance with Global's normal payroll practices, and provide Mr. Rubin with
his benefits during such two-year period. Under the employment agreement, for
a period of two years following his termination, Mr. Rubin is prohibited from
engaging in a business that is competitive with Global's business or from
soliciting employees of Global to become an employee of someone else.
16
Jordan M. Copland. On February 9, 2000, Global entered into an employment
agreement with Jordan M. Copland, Executive Vice President and Chief Financial
Officer of Global, for a term of four years beginning February 23, 2000. Mr.
Jordan's compensation is comprised of the following: (i) an annual base salary
of $150,000 for the first year, subject to annual increases in accordance with
Global's annual performance review procedures, (ii) incentive bonuses and/or
option grants as may be determined by Global's Chief Executive Officer,
subject to approval of Global's Board, (iii) a signing bonus of $25,000 upon
commencement of employment, (iv) an automobile allowance of $1,000 per month,
and (v) other benefits similar to those provided to Global's other officers.
Arthur H. Miller. On August 9, 1999, Global entered into an employment
agreement with Arthur H. Miller, Executive Vice President and General Counsel
of Global, for a term of five years,beginning September 20, 1999. Mr. Miller's
compensation is comprised of the following: (i) an annual base salary of
$200,000 during fiscal 2000 increasing to $225,000 effective January 1, 2001,
(ii) stock option grants, (iii) a restricted stock award, (iv) an incentive
bonus up to $100,000, as determined by Global's Chief Executive Officer, (v)
an automobile allowance of $1,000 per month, and (vi) other benefits similar
to those provided to Global's other officers.
Michael R. Conn. On February 24, 1999, Global entered into an employment
agreement with Michael R. Conn, Senior Vice President, Business Development of
Global, for an initial term of five years, subject to automatic annual
extensions after the initial term. Mr. Conn's compensation is comprised of the
following: (i) an annual base salary of $162,500 during fiscal 2000 increasing
to $175,000 effective January 1, 2001, (ii) stock option grants, (iii) a
restricted stock award, (iv) incentive compensation up to 30% of Mr. Conn's
base salary based upon the achievements of Mr. Conn and the results of
operations of Global, (iv) an automobile allowance of $500 per month, and (v)
other benefits similar to those provided to Global's other officers.
Each of Messrs. Copland's, Miller's and Conn's employment agreements may be
terminated by Global with cause, which is defined similarly to the definition
of cause in Mr. Rubin's agreement. In addition, Messrs. Copland, Miller and
Conn may terminate their agreements for good reason, which is defined
similarly to the definition of good reason in Mr. Rubin's agreement. In the
event of termination by Global other than for cause or termination by Mr.
Copland, Mr. Miller or Mr. Conn for good reason, Global will pay the executive
the severance and benefits specified in his agreement. Messrs. Copland's,
Miller's and Conn's employment agreements each contain a one year restrictive
covenant similar to the one in Mr. Rubin's agreement.
17
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of the cumulative total return for
Global Common Stock, the ISDEX Internet Stock Index and the NASDAQ Stock
Market, assuming an investment of $100 in each on December 29, 1995, and the
reinvestment of all dividends. The data points used for the performance graph
are listed below.
[PERFORMANCE CHART OF TOTAL RETURN TO STOCKHOLDERS]
Performance Graph Data 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00
Points.................. -------- -------- -------- -------- -------- --------
Global.................. $100.00 $114.27 $ 62.84 $179.99 $287.14 $126.43
ISDEX Internet Stock
Index.................. $100.00 $ 99.50 $ 99.87 $337.00 $860.35 $361.24
NASDAQ.................. $100.00 $123.03 $150.28 $210.68 $392.12 $238.06
Note: Stock price performance shown in the Stock Performance Graph for Global
Common Stock is historical and not necessarily indicative of future price
performance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Global does not have any formal policy concerning the direct or indirect
pecuniary interest of any of its officers, directors, security holders or
affiliates in any investment to be acquired or disposed of by Global or in any
transaction to which Global is a party or has an interest. Global will not
enter into any such transactions unless approved by a majority of the entire
Board of Directors, not including any interested director.
Prior to moving to its current location, Global's main executive offices and
warehouse were located in a 75,000 square foot facility leased from Michael G.
Rubin, Global's Chairman, President and Chief Executive Officer. Pursuant to
its terms, the lease expired on September 30, 2009 and Global was required to
pay approximately $29,000 per month, plus maintenance and utilities, for the
facility. During fiscal 2000, Global and Mr. Rubin agreed that Global would
pay Mr. Rubin monthly rent of approximately $19,000 for the months of
18
June 2000 through October 2000, monthly rent of approximately $14,000 for the
month of November 2000 and monthly rent of approximately $20,000 for the month
of December 2000, and that Global would pay Mr. Rubin the difference between
the monthly rent due under the lease and the amounts actually paid by Global
at a later date. During fiscal 2000, Global paid Mr. Rubin approximately
$68,000 of the $77,000 difference between the monthly rent due under the lease
and the amounts actually paid by Global. Subsequently, the lease was
terminated effective December 30, 2000 in exchange for a $500,000 payment by
Global to Mr. Rubin in full satisfaction of Global's obligations to Mr. Rubin
under the lease. Payments by Global to Mr. Rubin under the lease totalled
approximately $348,000 in fiscal 2000.
On July 23, 1999, SOFTBANK acquired an aggregate of 6,153,850 shares of
Global Common Stock at a price of $13.00 per share (the closing price on May
26, 1999, the day prior to the day Global and SOFTBANK agreed in principle to
the transaction) for an aggregate purchase price of approximately $80.0
million. On May 1, 2000, SOFTBANK acquired an additional 2,500,000 shares of
Common Stock at a price of $8.00 per share and warrants to purchase 1,250,000
shares of Common Stock at an exercise price of $10.00 per share, for an
aggregate purchase price of $20.0 million. Messrs. Fisher and Lax are Managing
Directors of the general partner of SOFTBANK Capital Partners LP and SOFTBANK
Capital Advisors Fund LP, the SOFTBANK affiliates through which SOFTBANK
acquired such shares and Mr. Perlis is Venture Partner of SOFTBANK Capital
Partners LP.
On May 1, 2000, Rustic Canyon acquired 625,000 shares of Common Stock at a
price of $8.00 per share and warrants to purchase 312,500 shares of Common
Stock at an exercise price of $10.00 per share, for an aggregate purchase
price of $5.0 million. Mr. Menell is a Partner of Rustic Canyon.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires Global's directors, executive officers, and persons who own more than
10% of a registered class of Global's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of Global. Officers, directors and greater
than 10% shareholders are required by SEC regulations to furnish Global with
copies of all Section 16(a) forms they file.
To Global's knowledge, based solely on a review of the copies of such
reports furnished to Global and written representations that no other reports
were required, all Section 16(a) filing requirements applicable to Global's
executive officers, directors and greater than 10% beneficial shareholders
were complied with during fiscal 2000, except that the following reports were
not timely filed: statement of changes in beneficial ownership filed by Mr.
Lamm.
OTHER MATTERS
As of the date of this Proxy Statement, Global knows of no other business
that will be presented for consideration at the Annual Meeting (other than
procedural matters). However, the enclosed proxy confers discretionary
authority to vote with respect to any and all of the following matters that
may come before the Annual Meeting: (i) matters that Global's Board of
Directors does not know, a reasonable time before proxy solicitation, are to
be presented for approval at the Annual Meeting; (ii) approval of the minutes
of a prior meeting of shareholders, if such approval does not constitute
ratification of the action at the meeting; (iii) the election of any person to
any office for which a bona fide nominee is unable to serve or for good cause
will not serve; (iv) any proposal omitted from this Proxy Statement and the
form of proxy pursuant to Rules 14a-8 or 14a-9 under the Exchange Act; and (v)
matters incident to the conduct of the Annual Meeting. If any such matters
come before the Annual Meeting, the proxy agents named in the accompanying
proxy card will vote in accordance with their judgment.
19
INDEPENDENT PUBLIC ACCOUNTANTS
General
The appointment of an independent public accountant is approved annually by
the Board of Directors based upon the recommendation of the Audit Committee.
The accounting firm of Deloitte & Touche LLP acted as Global's independent
public accountants for fiscal 2000. No independent public accountant has been
selected for fiscal 2001 as the Audit Committee has not yet made its
recommendation. A representative of Deloitte & Touche LLP is expected to be
present at the Annual Meeting and to have the opportunity to make a statement,
if he or she desires to do so, and is expected to be available to respond to
appropriate questions.
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP for professional services
rendered for the audit of Global's annual financial statements for the fiscal
year ended December 30, 2000 and the reviews of the financial statements
included in Global's Forms 10-Q for fiscal 2000 were approximately $376,000.
Financial Information Systems Design and Implementation Fees
Global did not engage Deloitte & Touche LLP to provide professional services
related to financial information systems design and implementation for fiscal
2000.
All Other Fees
The aggregate fees billed for services rendered by Deloitte & Touche LLP,
other than for services covered by the preceding two paragraphs, totaled
approximately $164,000 for fiscal 2000.
The Audit Committee has considered and determined that the services provided
by Deloitte & Touche LLP are compatible with Deloitte & Touche LLP maintaining
its independence.
20
ADDITIONAL INFORMATION
Global is subject to the reporting requirements of the Exchange Act, and in
accordance therewith files periodic reports and other information with the
SEC. Such reports, proxy statements and other information concerning Global
may be inspected and copies may be obtained (at prescribed rates) at Public
Reference Room maintained by the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the SEC located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and at
Northwest Atrium Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. In addition, electronically
filed documents, including reports, proxy and information statements and other
information regarding Global, can be obtained from the SEC's website at
http://www.sec.gov.
SHAREHOLDER PROPOSALS
A shareholder proposal for Global's 2002 Annual Meeting must be submitted to
Global at its office located at 1075 First Avenue, King of Prussia,
Pennsylvania, 19406, by December 31, 2001 to receive consideration for
inclusion in Global's 2001 proxy materials. Any such proposal must also comply
with the proxy rules under the Exchange Act, including Rule 14a-8.
In addition, the deadline for providing Global timely notice of any
shareholder proposal to be submitted outside of the Rule 14a-8 process for
consideration at Global's 2002 Annual Meeting is March 15, 2002. As to all
such matters which Global does not have notice on or prior to March 15, 2002,
discretionary authority shall be granted to the persons designated in Global's
proxy related to the 2002 Annual Meeting to vote on such proposal.
ANNUAL REPORT
This Proxy Statement is accompanied by Global's Annual Report to
Shareholders for fiscal 2000 (the "Annual Report").
Global will furnish without charge to each person to whom this proxy
statement is delivered, a copy of any or all of the documents incorporated by
reference in Global's Annual Report on Form 10-K for the fiscal year ended
December 30, 2000, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference to the information that is
incorporated), upon the written request of such person. Requests should be
sent to:
Global Sports, Inc.
1075 First Avenue
King of Prussia, PA 19406
(610) 265-3229
Attention: Investor Relations
By Order of the Board of Directors,
/s/ Arthur H. Miller
Arthur H. Miller,
Secretary
21
Appendix A
GLOBAL SPORTS, INC.
1996 EQUITY INCENTIVE PLAN
(amended and restated as of January 4, 2001)
- -------------------------------------------------------------------------------
1. Purpose
The purpose of the Global Sports, Inc. Equity Incentive Plan (the "Plan") is
to promote the long-term retention of key employees of Global Sports, Inc.,
("Global") and its current and future subsidiaries (collectively, the
"Company") and other persons who are in a position to make significant
contributions to the success of the Company, to further reward these employees
and other persons for their contributions to the Company's growth and
expansion, to provide additional incentive to these employees and other
persons to continue to make similar contributions in the future, and to
further align the interests of these employees and other persons with those of
Global's stockholders. These purposes will be achieved by granting to such
employees and other persons, in accordance with the provisions of this Plan,
Options, Stock Appreciation Rights, Restricted Stock or Unrestricted Stock
Awards, Deferred Stock Awards or Performance Awards, for shares of Global's
common stock, $0.01 par value per share ("Common Stock"), or Loans or
Supplemental Grants, or combinations thereof ("Awards").
2. Aggregate Number of Shares
2.1 The aggregate number of shares of Common Stock for which Awards may be
granted under the Plan will be 7,500,000 shares with an individual limit of
1,000,000 shares per year for each Employee (as defined below) covered by
Section 162(m) of the Code (as defined below). Notwithstanding the foregoing,
if there is any change in the capitalization of Global, such as by stock
dividend, stock split, combination of shares, exchange of securities,
recapitalization or other event which the Board of Directors (the "Board") of
Global deems, in its sole discretion, to be similar circumstances, the
aggregate number and/or kind of shares for which Awards may be granted under
the Plan shall be appropriately adjusted in a manner determined by the Board.
No fractional shares of Common Stock will be delivered under the Plan.
2.2 Treasury shares, reacquired shares and unissued shares of Common Stock
may be used for purposes of the Plan, at Global's sole discretion.
2.3 Shares of Common Stock that were issuable pursuant to an Award that has
terminated but with respect to which such Award had not been exercised, shares
of Common Stock that are issued pursuant to an Award but that are subsequently
forfeited and shares of Common Stock that were issuable pursuant to an Award
that was payable in Common Stock or cash but that was satisfied in cash, shall
be available for future Awards under the Plan.
3. Eligible Employees and Participants
3.1 All current and future key employees of the Company, including officers
and directors who are employed by the Company ("Employees"), and all other
persons, including directors of the Company who are not Employees, who, in the
opinion of the Board, are in a position to make a significant contribution to
the success of the Company, shall be eligible to receive Awards under the
Plan. No eligible Employee or other person (a "Participant") shall have any
right to receive an Award except as expressly provided in the Plan.
3.2 The Participants who shall actually receive Awards under the Plan shall
be determined by the Board in its sole discretion. In making such
determinations, the Board shall consider the positions and responsibilities of
eligible Employees and other persons, their past performance and contributions
to the Company's growth and expansion, the value of their services to the
Company, the difficulty of finding qualified replacements, and such other
factors as the Board deems pertinent in its sole discretion.
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4. Administration
4.1 The Plan shall be administered by the Board. The Board may delegate all
or any portion of its authority hereunder to one or more committees, each
consisting of one or more members of the Board. Once appointed, such
committees shall continue to serve until otherwise directed by the Board. Any
Awards granted to officers who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "1934 Act") shall be made by a committee
of two or more members of the Board, each of whom is a Non-Employee Director
(as defined or interpreted for purposes of Rule 16b-3 (including amendments
and successor provisions) as promulgated by the Securities and Exchange
Commission pursuant to its authority under the 1934 Act ("Rule 16b-3")) or as
otherwise permitted by Rule 16b-3 and other applicable regulations. Any Awards
granted to officers who are subject to Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code") shall be made by a committee of two or
more members of the Board, each of whom is an Outside Director (as defined or
interpreted for purposes of Section 162(m) of the Code) or as otherwise
permitted by Section 162(m) of the Code and other applicable regulations.
4.2 In addition to its other authority but subject to the provisions of the
Plan, the Board shall have the authority to determine, in its sole discretion,
the Participants who shall be eligible to receive Awards, the Participants who
shall actually receive Awards, the size of each Award, including the number of
shares of Common Stock subject to the Award, the type or types of each Award,
the date on which each Award shall be granted, the terms and conditions of
each Award, whether to waive compliance by a Participant with any obligations
to be performed by the Participant under an Award or waive any term or
condition of an Award, whether to amend or cancel an existing Award in whole
or in part (except that the Board may not, without the consent of the holder
of an Award or unless specifically authorized by the terms of an Award, take
any action under this clause with respect to such Award if such action would
adversely affect the rights of such holder), and the form or forms of
instruments that are required or deemed appropriate under the Plan, including
any written notices and elections required of Participants.
4.3 The Board may adopt such rules for the administration of the Plan as it
deems necessary or advisable, in its sole discretion. For all purposes of the
Plan, a majority of the members of the Board shall constitute a quorum, and
the vote or written consent of a majority of the members of the Board on a
particular matter shall constitute the act of the Board on that matter. The
Board shall have the exclusive right to construe the Plan and any Award, to
settle all controversies regarding the Plan or any Award, to correct defects
and omissions in the Plan and in any Award, and to take such further actions
as the Board deems necessary or advisable, in its sole discretion, to carry
out the purpose and intent of the Plan. Such actions shall be final, binding
and conclusive upon all parties concerned.
4.4 No member of the Board shall be liable for any act or omission (whether
or not negligent) taken or omitted in good faith, or for the good faith
exercise of any authority or discretion granted in the Plan to the Board, or
for any act or omission of any other member of the Board.
4.5 All costs incurred in connection with the administration and operation
of the Plan shall be paid by the Company. Except for the express obligations
of the Company under the Plan and under Awards granted in accordance with the
provisions of the Plan, the Company shall have no liability with respect to
any Award, or to any Participant or any transferee of shares of Common Stock
from any Participant, including, but not limited to, any tax liabilities,
capital losses, or other costs or losses incurred by any Participant or any
such transferee.
5. Types of Awards
5.1. Options.
(a) An Option is an Award entitling the recipient on exercise thereof to
purchase Common Stock at a specified exercise price. Both "incentive stock
options," as defined in Section 422 of the Code (any Option intended to
qualify as an incentive stock option is hereinafter referred to as an "ISO"),
and Options that are not incentive stock options ("non-ISO"), may be granted
under the Plan. ISOs shall be awarded only to Employees.
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(b) The exercise price of an Option will be determined by the Board subject
to the following:
(1) The exercise price of an ISO shall not be less than 100% (110% in the
case of an ISO granted to a ten percent shareholder) of the fair market value
of the Common Stock subject to the ISO, determined as of the time the Option
is granted. A Aten-percent shareholder@ is any person who at the time of grant
owns, directly or indirectly, or is deemed to own by reason of the attribution
rules of Section 424(d) of the Code, stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or of any
of its subsidiaries.
(2) The exercise price of a non-ISO shall not be less than 100% of the
fair market value of the Common Stock subject to the non-ISO, determined as of
the time the non-ISO is granted, except that:
(A) the exercise price of a non-ISO may be equal to or greater than 85%
of the fair market value of the Common Stock subject to the non-ISO, if the
discount is granted in lieu of a reasonable amount of cash compensation; or
(B) the exercise price of a non-ISO granted pursuant to a Performance
Award may be (i) 100% of the fair market value of the Common Stock subject to
the non-ISO, determined either as of the time the Performance Award is granted
or as of the time the non-ISO is granted pursuant to the Performance Award; or
(ii) an amount less than such fair market value if the discount is granted in
lieu of a reasonable amount of cash compensation as consideration for
exceeding the goal(s) set forth in the Performance Award.
(3) In no case may the exercise price paid for Common Stock which is part
of an original issue of authorized Common Stock be less than the par value per
share of the Common Stock.
(4) The Board may reduce the exercise price of an option at any time after
the time of grant, but in the case of an Option originally awarded as an ISO,
only with the consent of the Participant.
(c) The period during which an Option may be exercised will be determined by
the Board, except that the period during which an ISO may be exercised will
not exceed ten years (five years, in the case of an ISO granted to a ten-
percent shareholder) from the day immediately preceding the date the Option
was granted.
(d) An Option will become exercisable at such time or times, and on such
terms and conditions, as the Board may determine. The Board may at any time
accelerate the time at which all or any part of the Option may be exercised.
Any exercise of an Option must be in writing, signed by the proper person and
delivered or mailed to the Company, accompanied by (i) any documents required
by the Board and (ii) payment in full in accordance with Section 5.1(e) below
for the number of shares for which the Option is exercised.
(e) Stock purchased on exercise of an Option must be paid for as follows:
(i) in cash or by check (acceptable to Global in accordance with guidelines
established for this purpose), bank draft or money order payable to the order
of Global or (ii) if so permitted by the instrument evidencing the Option (or
in the case of an Option which is not an ISO, by the Board at or after grant
of the Option), (A) through the delivery of shares of Common Stock which have
been outstanding for at least six months (unless the Board expressly approves
a shorter period) and which have a fair market value on the last business day
preceding the date of exercise at least equal to the exercise price, or (B) by
delivery of a promissory note of the Option holder to Global, payable on such
terms and conditions as the Board may determine, or (C) by delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to
Global sufficient funds to pay the exercise price, or (D) by any combination
of the permissible forms of payment; provided, that if the Common Stock
delivered upon exercise of the Option is an original issue of authorized
Common Stock, at least so much of the exercise price as represents the par
value of such Common Stock must be paid other than by the Option holder=s
promissory note.
(f) If the market price of shares of Common Stock subject to an Option
(other than an Option which is in tandem with a Stock Appreciation Right as
described in Section 6.2 below) exceeds the exercise price of the Option at
the time of its exercise, the Board may cancel the Option and cause Global to
pay in cash or in shares of Common Stock (at a price per share equal to the
fair market value per share) to the person exercising the Option an amount
equal to the difference between the fair market value of the Common Stock
which would
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have been purchased pursuant to the exercise (determined on the date the
Option is canceled) and the aggregate exercise price which would have been
paid. The Board may exercise its discretion to take such action only if it has
received a written request from the person exercising the Option, but such a
request will not be binding on the Board.
5.2. Stock Appreciation Rights.
(a) A Stock Appreciation Right is an Award entitling the recipient on its
exercise to receive an amount, in cash or Common Stock or a combination
thereof (such form to be determined by the Board), determined in whole or in
part by reference to appreciation in Common Stock value. In general, a Stock
Appreciation Right entitles the Participant to receive, with respect to each
share of Common Stock as to which the Right is exercised, the excess of the
share's fair market value on the date of exercise over its fair market value
on the date the Right was granted. However, the Board may provide at the time
of grant that the amount the recipient is entitled to receive will be adjusted
upward or downward under rules established by the Board to take into account
the performance of the Common Stock in comparison with the performance of
other stocks or an index or indices of other stocks. The Board may also grant
Stock Appreciation Rights that provide that following a Change in Control of
the Company (as defined in Section 6.3(b)) the holder of such Right will be
entitled to receive, with respect to each share of Common Stock subject to the
Right, an amount equal to the excess of a specified value (which may include
an average of values) for a share of Common Stock during a period preceding
such Change in Control over the fair market value of a share of Common Stock
on the date the Right was granted.
(b) Stock Appreciation Rights may be granted in tandem with, or
independently of, Options granted under the Plan. A Stock Appreciation Right
granted in tandem with an Option that is not an ISO may be granted either at
or after the time the Option is granted. A Stock Appreciation Right granted in
tandem with an ISO may be granted only at the time the Option is granted.
(c) When Stock Appreciation Rights are granted in tandem with Options, the
following rules will apply:
(1) The Stock Appreciation Right will be exercisable only at such time or
times, and to the extent, that the related Option is exercisable and will be
exercisable in accordance with the procedure required for exercise of the
related Option.
(2) The Stock Appreciation Right will terminate and no longer be
exercisable upon the termination or exercise of the related Option, except
that a Stock Appreciation Right granted with respect to less than the full
number of shares covered by an Option will not be reduced until the number of
shares as to which the related Option has been exercised or has terminated
exceeds the number of shares not covered by the Stock Appreciation Right.
(3) The Option will terminate and no longer be exercisable upon the
exercise of the related Stock Appreciation Right.
(4) The Stock Appreciation Right will be transferable only with the
related Option.
(5) A Stock Appreciation Right granted in tandem with an ISO may be
exercised only when the market price of the Stock subject to the Option
exceeds the exercise Price of such option.
(d) A Stock Appreciation Right not granted in tandem with an Option will
become exercisable at such time or times, and on such terms and conditions, as
the Board may specify. The Board may at any time accelerate the time at which
all or any part of the Right may be exercised. Any exercise of an independent
Stock Appreciation Right must be in writing, signed by the proper person and
delivered or mailed to Global, accompanied by any other documents required by
the Board.
5.3. Restricted and Unrestricted Stock.
(a) A Restricted Stock Award entitles the recipient to acquire, for a
purchase price not less than the par value, shares of Common Stock subject to
the restrictions described in Section 5.3(d) ("Restricted Stock").
A-4
(b) A Participant who is granted a Restricted Stock Award shall have no
rights with respect to such Award unless the Participant accepts the Award by
written instrument delivered or mailed to Global accompanied by payment in
full of the specified purchase price, if any, of the shares covered by the
Award. Payment may be by certified or bank check or other instrument
acceptable to the Board.
(c) A Participant who receives Restricted Stock shall have all the rights of
a stockholder with respect to such stock, including voting and dividend
rights, subject to the restrictions described in 5.3(d) and any other
conditions imposed by the Board at the time of grant. Unless the Board
otherwise determines, certificates evidencing shares of Restricted Stock will
remain in the possession of the Company until such shares are free of all
restrictions under the Plan.
(d) Except as otherwise specifically provided by the Plan or the Award,
Restricted Stock may not be sold, assigned, exchanged, pledged, gifted or
otherwise disposed of, or transferred, and if a Participant suffers a Status
Change (as defined in Section 6.1) for any reason, must be offered to Global
for purchase for the amount of cash paid for such stock, or forfeited to the
Company if no cash was paid. These restrictions will lapse at such time or
times, and on such terms and conditions, as the Board may determine. The Board
may at any time accelerate the time at which the restrictions on all or any
part of the shares will lapse.
(e) Any Participant making, or required by an Award to make, an election
under Section 83(b) of the Code with respect to Restricted Stock shall deliver
to Global, within ten days of the filing of such election with the Internal
Revenue Service, a copy of such election.
(f) The Board may, at the time any Award described in this Section 5 is
granted, provide that any or all the Common Stock delivered pursuant to the
Award will be Restricted Stock.
(g) The Board may, in its sole discretion, approve the sale to any
Participant of shares of Common Stock free of restrictions under the Plan for
a price which is not less than the par value of the Common Stock.
5.4. Deferred Stock. A Deferred Stock Award entitles the recipient to
receive shares of Common Stock to be delivered in the future. Delivery of the
Common Stock will take place at such time or times, and on such terms and
conditions, as the Board may determine. The Board may at any time accelerate
the time at which delivery of all or any part of the Common Stock will take
place. At the time any Award described in this Section 5 is granted, the Board
may provide that, at the time Common Stock would otherwise be delivered
pursuant to the Award, the Participant will instead receive an instrument
evidencing the Participant's right to future delivery of Deferred Stock.
5.5. Performance Awards. A Performance Award entitles the recipient to
receive, without payment, an Award or Awards described in this Section 5 (such
form to be determined by the Board) following the attainment of such
performance goals, during such measurement period or periods, and on such
other terms and conditions, all as the Board may determine. Performance goals
may be related to personal performance, corporate performance, group or
departmental performance or any such other category of performance as the
Board may determine. The Board shall have the authority to determine the
performance goals, the period or period during which performance is to be
measured and all other terms and conditions applicable to the Award.
5.6. Loans and Supplemental Grants.
(a) The Company may make a loan to a Participant ("Loan"), either in
connection with the purchase of Common Stock under the Award or the payment of
any Federal, state and local income tax with respect to income recognized as a
result of the Award. The Board shall have the authority, in its sole
discretion, to determine whether to make a Loan, the amount, terms and
conditions of the Loan, including the interest rate (which may be zero),
whether the Loan is to be secured or unsecured or with or without recourse
against the borrower, the terms on which the Loan is to be repaid and the
terms and conditions, if any, under which the Loan may be forgiven. In no
event shall any Loan have a term (including extensions) in excess of ten
years.
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(b) In connection with any Award, the Board may grant a cash award to the
Participant ("Supplemental Grant") not to exceed an amount equal to (i) the
amount of any Federal, state and local income tax on ordinary income for which
the Participant may be liable with respect to the Award, determined by
assuming taxation at the highest marginal rate, plus (ii) an additional amount
on a grossed-up basis intended to make the Participant whole on an after-tax
basis after discharging all the Participant's income tax liabilities arising
from all payments under this Section 5. Any payments under this Section 5(b)
shall be made at the time the Participant incurs Federal income tax liability
with respect to the Award.
6. Events Affecting Outstanding Awards
6.1. Termination of Service by Death or Disability. If a Participant who is
an Employee ceases to be an Employee, or if there is a termination of the
consulting, service or other relationship in respect of which a non-Employee
Participant was granted an Award under the Plan (such termination of
employment or other relationship referred to as a "Status Change") by reason
of death or permanent disability (as determined by the Board), the following
rules shall apply, unless otherwise determined by the Board:
(a) All Options and Stock Appreciation Rights held by the Participant at the
time of such Status Change, to the extent then exercisable, will continue to
be exercisable by the Participant's heirs, executor, administrator or other
legal representative, for a period of one year after the Participant's Status
Change. After the expiration of such one-year period, all such Options and
Stock Appreciation Rights shall terminate. In no event, however, shall an
Option or Stock Appreciation Right remain exercisable beyond the latest date
on which it could have been exercised without regard to this Section 6. All
Options and Stock Appreciation Rights held by a Participant at the time of
such Status Change that are not then exercisable shall terminate upon such
Status Change.
(b) All Restricted Stock held by the Participant at the time of such Status
Change shall be transferred to the Company (and, in the event the certificates
representing such Restricted Stock are held by the Company, such Restricted
Stock shall be so transferred without any further action by the Participant)
in accordance with Section 5.3 above.
(c) Any payment or benefit under a Deferred Stock Award, Performance Award
or Supplemental Grant to which the Participant was not irrevocably entitled at
the time of such Status Change shall be forfeited and the Award canceled as of
the time of such Status Change.
6.2. Termination of Service Other Than by Death or Disability. If a
Participant suffers a Status Change other than by reason of death or permanent
disability (as determined by the Board), the following rules shall apply,
unless otherwise determined by the Board at the time of grant of an Award:
(a) All Options and Stock Appreciation Rights held by the Participant at the
time of such Status Change, to the extent then exercisable, will continue to
be exercisable by the Participant for a period of three months after the
Participant's Status Change. After the expiration of such three-month period,
all such Options and Stock Appreciation Rights shall terminate. In no event,
however, shall an Option or Stock Appreciation Right remain exercisable beyond
the latest date on which it could have been exercised without regard to this
Section 6. All Options and Stock Appreciation Rights held by a Participant at
the time of such Status Change that are not then exercisable shall terminate
upon such Status Change.
(b) All Restricted Stock held by the Participant at the time of such Status
Change shall be transferred to the Company (and, in the event the certificates
representing such Restricted Stock are held by the Company, such Restricted
Stock shall be so transferred without any further action by the Participant)
in accordance with Section 5.3 above.
(c) Any payment or benefit under a Deferred Stock Award, Performance Award,
or Supplemental Grant to which the Participant was not irrevocably entitled at
the time of such Status Change shall be forfeited and the Award canceled as of
the date of such Status Change.
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(d) A termination by the Company of a Participant's employment with or
service to the Company shall be for "Cause" only if the Participant: (i) was
guilty of gross negligence or willful misconduct in the performance of his or
her duties for the Company, (ii) breached or violated, in a material respect,
any agreement between the Participant and the Company or any of the Company's
policy statements regarding conflicts-of-interest, insider trading or
confidentiality, (iii) committed a material act of dishonesty or breach of
trust, (iv) acted in a manner that was inimical or injurious, in a material
respect, to the business or interests of the Company, or (v) was convicted of
a felony.
(e) For all purposes of this Section 6.2 and Section 6.3, (i) if a
Participant is an Employee of a subsidiary of Global and such subsidiary
ceases to be a subsidiary of Global, then the Participant's employment with
the Company will be deemed to have been terminated by the Company without
Cause, unless the Participant is transferred to Global or another subsidiary
of Global; (ii) the employment with the Company of a Participant who is an
Employee will not be deemed to have been terminated if the Participant is
transferred from Global to a subsidiary of Global, or vice versa, or from one
subsidiary of Global to another; and (iii) if a Participant who is an Employee
terminates his or her employment with the Company following a reduction in his
or her rate of compensation, then the Participant's employment with the
Company will be deemed to have been terminated by the Company without Cause.
6.3. Change in Control
(a) In the event of a Change in Control (as defined in Section 6.3(b)), the
following rules will apply, unless otherwise expressly provided by the Board
at the time of the grant of an Award:
(1) Each outstanding Option and Stock Appreciation Right shall automatically
become exercisable in full six months after the occurrence of such Change in
Control or, if sooner, upon a termination by the Company of the Participant's
employment with or service to the Company for any reason other than for Cause
(as defined in Section 6.2(d)). This provision shall not prevent an Option or
Stock Appreciation Right from becoming exercisable sooner as to Common Stock
or cash that would otherwise have become available under such Option or Right
during such period.
(2) Each outstanding share of Restricted Stock shall automatically become free
of all restrictions and conditions six months after the occurrence of such
Change in Control or, if sooner, upon a termination by the Company of the
Participant's employment with or service to the Company for any reason other
than for Cause (as defined in Section 6.2(d)). This provision shall not
prevent the earlier lapse of any restrictions or conditions on Restricted
Stock that would otherwise have lapsed during such period.
(3) Conditions on Deferred Stock Awards, Performance Awards and Supplemental
Grants which relate only to the passage of time and continued employment shall
automatically terminate six months after the occurrence of such Change in
Control or, if sooner, upon a termination by the Company of the Participant's
employment with or service to the Company for any reason other than for Cause
(as defined in Section 6.2(d)). This provision shall not prevent the earlier
lapse of any conditions relating to the passage of time and continued
employment that would otherwise have lapsed during such period. Performance or
other conditions (other than conditions relating only to the passage of time
and continued employment) shall continue to apply unless otherwise provided in
the instrument evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed to by the Board.
(b) A "Change in Control" means: (i) the occurrence of an event that would,
if known to the Company's management, be required to be reported by the
Company under Item 1(a) of Form 8-K pursuant to the 1934 Act; or (ii) the
acquisition or receipt, in any manner, by any person (as defined for purposes
of the 1934 Act) or any group of persons acting in concert, of direct or
indirect beneficial ownership (as defined for purposes of the 1934 Act) of 50%
or more of the combined voting securities ordinarily having the right to vote
for the election of directors of the Company; or (iii) a change in the
constituency of the Board with the result that individuals (the "Incumbent
Directors") who are members of the Board on the Effective Date (as specified
in Section 9) cease for any reason to constitute at least a majority of the
Board, provided that any individual who is elected to the
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Board after the Effective Date and whose nomination for election was
unanimously approved by the Incumbent Directors shall be considered an
Incumbent Director beginning on the date of his or her election to the Board;
or (iv) the sale, exchange or other disposition of all or a significant
portion of the Company's business or assets, or the execution by the Company
of a binding agreement providing for such a transaction; unless in any such
case, at least a majority of the Incumbent Directors determine, prior to the
occurrence of such Change in Control, that no Change in Control has or will
have occurred.
7. Grant and Acceptance of Awards
7.1. The Board's approval of a grant of an Award under the Plan, including
the names of Participants and the size of the Award, including the number of
shares of Common Stock subject to the Award, shall be reflected in minutes of
meetings held by the Board or the Board or in written consents signed by
members of the Board. Once approved by the Board, each Award shall be
evidenced by such written instrument, containing such terms as are required by
the Plan and such other terms, consistent with the provisions of the Plan, as
may be approved from time to time by the Board.
7.2 Each instrument may be in the form of agreements to be executed by both
the Participant and the Company, or certificates, letters or similar
instruments, which need not be executed by the Participant but acceptance of
which shall evidence agreement to the terms thereof. The receipt of an Award
shall not impose any obligation on the Participant to accept the Award.
7.3. Except as specifically provided by the Plan or the instrument
evidencing an Award, a Participant shall not become a stockholder of Global
until (a) the Participant makes any required payments in respect of the Common
Stock issued or issuable pursuant to the Award, (b) the Participant furnishes
Global with any required agreements, certificates, letters or other
instruments, and (c) the Participant actually receives the shares of Common
Stock. Subject to any terms and conditions imposed by the Plan or the
instrument evidencing an Award, upon the occurrence of all of the conditions
set forth in the immediately preceding sentence, a Participant shall have all
rights of a stockholder with respect to shares of Common Stock, including, but
not limited to, the right to vote such shares and to receive dividends and
other distributions paid with respect to such shares. The Board may, upon such
terms and conditions as it deems appropriate, provide that a Participant will
receive a benefit in lieu of cash dividends that would have been payable on
any and all Common Stock subject to the Participant's Award, had such Common
Stock been outstanding. Without limitation, the Board may provide for payment
to the Participant of amounts representing such dividends, either currently or
in the future, or for the investment of such amounts on behalf of the
Participant.
7.4. Notwithstanding any other provision of the Plan, the Company shall not
be obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove any restriction from shares of Common Stock previously delivered under
the Plan (a) until all conditions to the Award have been satisfied or removed,
(b) until, in the opinion of counsel to the Company, all applicable Federal
and state laws and regulations have been complied with, (c) if the outstanding
Common Stock is at the time listed on any stock exchange or included for
quotation on an inter-dealer system, until the shares to be delivered have
been listed or included or authorized to be listed or included on such
exchange or system upon official notice of notice of issuance, (d) if it might
cause the Company to issue or sell more shares of Common Stock that the
Company is then legally entitled to issue or sell, and (e) until all other
legal matters in connection with the issuance and delivery of such shares have
been approved by counsel to the Company. If the sale of Common Stock has not
been registered under the Securities Act of 1933, as amended, the Company may
require, as a condition to exercise of an Award, such representations or
agreements as counsel to the Company may consider appropriate to avoid
violation of such Act and may require that the certificates evidencing such
Common Stock bear an appropriate legend restricting transfer. If an Award is
exercised by the Participant's legal representative, the Company shall be
under no obligation to deliver Common Stock pursuant to such exercise until
the Company is satisfied as to the authority of such representative.
8. Tax Withholding
The Company shall withhold from any cash payment made pursuant to an Award an
amount sufficient to satisfy all Federal, state and local withholding tax
requirements (the "withholding requirements"). In the case of an
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Award pursuant to which Common Stock may be delivered, the Board shall have
the right to require that the Participant or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding requirements, or
make other arrangements satisfactory to the Board with regard to such
requirements, prior to the delivery of any Common Stock. If and to the extent
that such withholding is required, the Board may permit a Participant or such
other person or entity to elect at such time and in such manner as the Board
may determine to have the Company hold back from the shares of Common Stock to
be delivered, or to deliver to the Company, Common Stock having a value
calculated to satisfy the withholding requirement. If at the time an ISO is
exercised, the Board determines that the Company could be liable for
withholding requirements with respect to a disposition of the Common Stock
received upon exercise, the Board may require as a condition of exercise that
the person exercising the ISO agree (a) to inform the Company promptly of any
disposition (within the meaning of Section 424(c) of the Code) of Common Stock
received upon exercise, and (b) to give such security as the Board deems
adequate to meet the potential liability of the Company for the withholding
requirements and to augment such security from time to time in any amount
reasonably deemed necessary by the Board to preserve the adequacy of such
security.
9. Stockholder Approval, Effective Date and Term of Plan
The Plan was adopted by the Board on March 20, 1996, subject to the approval
of Global's stockholders. The Plan was approved by Global's stockholders at
Global's 1996 annual meeting of stockholders on July 8, 1996. The effective
date of this Plan ("Effective Date") is July 8, 1996, the date on which the
Plan was approved by the affirmative vote of the holders of a majority of the
outstanding shares of Global's Common Stock. No Award shall be granted more
than ten years after the Effective Date. The Plan has been amended as follows:
Date Amended by Date Approved by
Nature of Amendment Board of Directors Shareholders
- -------------------------------------- ------------------ ----------------
To increase the aggregate number of September 24, 1996 December 4, 1997
shares of Common Stock issuable under
the Plan from 100,000 to 1,000,000
To increase the aggregate number of January 5, 1999 July 13, 1999
shares of Common Stock issuable under
the Plan from 1,000,000 to 3,000,000
To provide that the Plan shall be November 16, 1999 N/A
administered by the Board and that
the Board may delegate all or any
portion of its authority under the
Plan to one or more committees
To increase the aggregate number of April 18, 2000 May 25, 2000
shares of Common Stock issuable under
the Plan from 3,000,000 to 4,500,000
To increase the aggregate number of January 4, 2001
shares of Common Stock issuable under
the Plan from 4,500,000 to 7,500,000;
to increase the number of shares
which may be granted to Employees
covered by Section 162(m) of the Code
to 1,000,000; to amend the effect of
a Status Change on outstanding
Restricted Stock Awards; and to amend
the definitions of "Cause" and
"Change of Control"
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10. Effect, Amendment, Suspension and Termination
Neither adoption of the Plan nor the grant of Awards to a Participant will
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Common Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Common Stock
may be issued to Employees or other persons or entities. The Board reserves
the right, at any time and from time to time, to amend the Plan in any way, or
to suspend or terminate the Plan, effective as of the date specified by the
Board when it takes such action, which date may be before or after the date
the Board takes such action; provided that any such action shall not affect
any Awards granted before the actual date on which such action is taken by the
Board; and further provided that the approval of Global's stockholders shall
be required whenever necessary for the Plan to continue to satisfy the
conditions of Rule 16b-3 under the 1934 Act, Section 422 of the Code with
respect to the award of ISOs (unless the Board determines that ISOs shall no
longer be granted under the Plan), any bylaw, rule or regulation of the market
system or stock exchange on which Global's Common Stock is then listed or
admitted to trading, or any other applicable law, rule or regulation.
11. Other Provisions
11.1 othing contained in the Plan or any Award shall confer upon any
Employee or other Participant the right to continue in the employ of, or to
continue to provide service to, the Company or any affiliated person, or
interfere in any way with the right of the Company or any affiliated person to
terminate the employment or service of any Employee or other Participant for
any reason.
11.2 Corporate action constituting an offer by Global of Common Stock to any
Participant under the terms of an Award shall be deemed completed as of the
date of grant of the Award, regardless of when the instrument, certificate, or
letter evidencing the Award is actually received or accepted by the
Participant.
11.3 None of a Participant's rights under any Award or under the Plan may be
assigned or transferred in any manner other than by will or under the laws of
descent and distribution. The foregoing shall not, however, restrict a
Participant's rights with respect to Unrestricted Stock or the outright
transfer of cash, nor shall it restrict the ability of a Participant's heirs,
estate, beneficiaries, or personal or legal representatives to enforce the
terms of the Plan with respect to Awards granted to the Participant.
11.4 The Plan, and all Awards granted hereunder, shall be governed by and
construed in accordance with the laws of the State of Delaware. The headings
of the Sections of the Plan are for convenience of reference only and shall
not affect the interpretation of the Plan. All pronouns and similar references
in the Plan shall be construed to be of such number and gender as the context
requires or permits. If any provision of the Plan is determined to be
unenforceable for any reason, then that provision shall be deemed to have been
deleted or modified to the extent necessary to make it enforceable, and the
remaining provisions of the Plan shall be unaffected.
11.5 All notices with respect to the Plan shall be in writing and shall be
hand delivered or sent by certified mail or reputable overnight delivery
service, expenses prepaid. Notices to the Company or the Board shall be
delivered or sent to Global's headquarters to the attention of its Chief
Financial Officer and its General Counsel. Notices to any Participant or
holder of shares of Common Stock issued pursuant to an Award shall be
sufficient if delivered or sent to such person's address as it appears in the
regular records of the Company or its transfer agent.
11.6. If there is any change in the capitalization of the Company, such as
by stock dividend, stock split, combination of shares, exchange of securities,
recapitalization or other event which the Board deems, in its sole discretion,
to be similar circumstances, the Board may make such adjustments to the number
and/or kind of shares of stock or securities subject to Awards then
outstanding or subsequently granted, any exercise prices relating to such
Awards and any other provision of such Awards affected by such change, as the
Board may determine in its sole discretion. The Board may also make such
adjustments to take into account material changes in law or in accounting
practices or principles, mergers, consolidations, acquisitions, dispositions
or similar corporate transactions, or any other event, as the Board may
determine in its sole discretion.
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11.7. The Board may agree at any time, upon request of a Participant, to
defer the date on which any payment under an Award shall be made.
11.8. In any case that a Participant purchases Common Stock under an Award
for a price equal to the par value of the Common Stock, the Board may
determine, in its sole discretion, that such price has been satisfied by past
services rendered by the Participant.
11.9. For the purposes of the Plan and any Award granted hereunder, unless
otherwise determined by the Board, the term "fair market value" of Common
Stock on a specified date shall mean the last sale price for one share of
Common Stock on the last trading day on or before the specified date, as
reported on the Nasdaq Stock Market, or on such other market system or stock
exchange on which Global's Common Stock is then listed or admitted to trading,
or, if the foregoing does not apply, the market value determined by the Board.
11.10 Except as otherwise indicated, the term "person," as used in the Plan
shall include individuals, corporations, partnerships, trusts, estates,
limited liability companies and partnerships and any other type of entity.
THE UNDERSIGNED CERTIFIES THAT THE AMENDMENT AND RESTATEMENT OF THIS PLAN WAS
DULY APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS OF GLOBAL SPORTS, INC.
PURSUANT TO RESOLUTIONS ADOPTED AT A MEETING OF THE BOARD OF DIRECTORS ON THE
4TH DAY OF JANUARY, 2001.
/s/Arthur H. Miller
By___________________________________
Arthur H. Miller
Secretary
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Appendix B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF GLOBAL SPORTS, INC.
The undersigned, Michael G. Rubin, President and Chief Executive Officer of
Global Sports, Inc., a corporation incorporated under the Delaware General
Corporation Law (the "Corporation"), does hereby certify that he is the
President and Chief Executive Officer of the Corporation and that the
Corporation has adopted this Amended and Restated Certificate of Incorporation
in accordance with Sections 242 and 245 of the General Corporation Law of the
State of Delaware.
The Amended and Restated Certificate of Incorporation shall read in full as
follows:
ARTICLE I.
The current name of the Corporation is Global Sports, Inc. The name under
which the Corporation was originally incorporated was ABE Corporation, and the
date of filing of its original Certificate of Incorporation with the Secretary
of State of the State of Delaware was September 15, 1986.
ARTICLE II.
The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, Wilmington, Delaware, County of New Castle. The
name of the Corporation's registered agent at such address is The Prentice-
Hall Corporation System, Inc.
ARTICLE III.
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Delaware General Corporation
Law ("DGCL").
ARTICLE IV.
A. The total number of shares of stock which the Corporation shall have
authority to issue is ninety-five million (95,000,000) of which ninety million
(90,000,000) shall be Common Stock, par value $0.01 per share, and five
million (5,000,000) shall be Preferred Stock, par value $0.01 per share.
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby expressly authorized to provide for
the issue of all or any of the remaining shares of the Preferred Stock in one
or more series, and to fix the number of shares and to determine or alter for
each such series, such voting powers, full or limited, or no voting powers,
and such designations, preferences, and relative, participating, optional, or
other rights and such qualifications, limitations, or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions adopted by the
Board of Directors providing for the issuance of such shares and as may be
permitted by the DGCL. The Board of Directors is also expressly authorized to
increase or decrease the number of shares of any series subsequent to the
issuance of shares of that series, but not below the number of shares of such
series then outstanding. In case the number of shares of any series shall be
decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of
the resolution originally fixing the number of shares of such series. The
number of authorized shares of Preferred Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of the holders of the Preferred Stock, or of any series thereof, unless a
vote of any such holders is required pursuant to the terms of any certificate
of designation filed with respect to any series of Preferred Stock.
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ARTICLE V.
The Corporation shall have perpetual existence.
ARTICLE VI.
For the management of the business and for the conduct of the affairs of the
Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any
class thereof, as the case may be, it is further provided that:
A.
1. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the Board of Directors shall be fixed exclusively by
resolutions adopted by a majority of the authorized number of directors
constituting the Board of Directors.
2. Subject to the rights of the holders of any series of Preferred Stock to
elect additional directors under specified circumstances, directors shall be
elected at each annual meeting of stockholders for a term of one year. Each
director shall serve until his successor is duly elected and qualified or
until his death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
3. The Board of Directors or any individual director may be removed from
office at any time (a) with cause by the affirmative vote of the holders of a
majority of the voting power of all the then-outstanding shares of capital
stock of the Corporation entitled to vote at an election of directors, or (b)
without cause by the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the voting power of all the then-outstanding
shares of the capital stock of the Corporation entitled to vote generally at
an election of directors.
4. Subject to the rights of the holders of any series of Preferred Stock,
any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other causes and any newly created directorships
resulting from any increase in the number of directors, shall, unless the
Board of Directors determines by resolution that any such vacancies or newly
created directorships shall be filled by the stockholders, except as otherwise
provided by law, be filled only by the affirmative vote of a majority of the
directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance
with the preceding sentence shall hold office for the remainder of the full
term of the director for which the vacancy was created or occurred and until
such director's successor shall have been elected and qualified.
B.
1. The Board of Directors is expressly empowered to adopt, amend or repeal
the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws
of the Corporation by the Board of Directors shall require the approval of a
majority of the authorized number of directors. The stockholders shall also
have power to adopt, amend or repeal the Bylaws of the Corporation; provided,
however, that, in addition to any vote of the holders of any class or series
of stock of the Corporation required by law or by this Certificate of
Incorporation, the affirmative vote of the holders of at least sixty-six and
two thirds percent (66 2/3%) of the voting power of all of the then-
outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class,
shall be required to adopt, amend or repeal any provision of the Bylaws of the
Corporation.
2. The directors of the Corporation need not be elected by written ballot
unless the Bylaws so provide.
3. Advance notice of stockholder nominations for the election of directors and
of business to be brought by stockholders before any meeting of the
stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.
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ARTICLE VII.
A. The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent under applicable law. If the DGCL is
amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated to the fullest extent permitted by the DGCL,
as so amended.
B. Any repeal or modification of this Article VII shall be prospective and
shall not affect the rights under this Article VII in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability
or indemnification.
ARTICLE VIII.
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, Michael G. Rubin, the President and Chief Executive
Officer of the Corporation, has caused this Amended and Restated Certificate
of Incorporation to be signed by him this day of May, 2001.
Michael G. Rubin,
President and Chief Executive
Officer
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Appendix C
GLOBAL SPORTS, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Charter
1. Purpose
The primary function of the Audit Committee is to assist the Board of
Directors of Global Sports, Inc. (the "Company") in fulfilling its oversight
responsibilities by reviewing: the financial reports and other financial
information provided by the Company to any governmental body or the public;
the Company's systems of internal controls regarding finance, accounting,
legal compliance and business conduct that management and the Board have
established; and the Company's auditing, accounting and financial reporting
processes generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence to, the
Company's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are to:
. Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
. Review and appraise the audit efforts of the Company's independent
accountants and financial management, including internal auditing, if
applicable.
. Provide an open avenue of communication among the independent
accountants, financial and senior management, including internal
auditing, if applicable, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. Composition
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall satisfy the independence and
experience requirements of The Nasdaq Stock Market ("Nasdaq") or of such other
securities exchange as are applicable to the Company. The members of the
Committee shall be elected by the Board at the annual organizational meeting
of the Board or until their successors shall be duly elected and qualified.
Unless a Chair is elected by the full Board, the members of the Committee may
designate a Chair by majority vote of the full Committee membership.
III. Meetings
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, including the
director of the internal auditing, if applicable, and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or any of these groups believe should be discussed privately. In
addition, the Committee or at least its Chair should meet with the independent
accountants and management quarterly to review the Company's financials
consistent with IV.4. below.
IV. Responsibilities and Duties
To fulfill its responsibilities and duties the Audit Committee shall:
1. Documents/Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
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2. Review the Company's annual financial statements and any reports or
other financial information submitted by the Company to any governmental
body or the public, including any certification, report, opinion, or
review rendered by the independent accountants.
3. Review the regular internal reports to management prepared by internal
auditing, if applicable, and management's response.
4. Review with financial management and the independent accountants the
Company's interim financial information and the Company's Quarterly
Report on Form 10-Q prior to the release of earnings and the filing of
such report, as applicable. The Chair of the Committee may represent the
entire Committee for purposes of this review.
2. Independent Accountants
1. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness, and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Company to determine the accountant's independence.
2. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
3. Periodically consult with the independent accountants out of the
presence of management about internal controls and fullness and accuracy
of the organization's financial statements.
3. Financial Reporting Process
1. In consultation with the independent accountants and internal auditing,
if applicable, review the integrity of the Company's financial reporting
processes, both internal and external.
2. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
3. Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or internal auditing, if
applicable.
A. Process Improvement
1. Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountants and
internal auditing, if applicable, regarding any significant judgments
made in management's preparation of the financial statements and the
view of each as to appropriateness of such judgments.
2. Following completion of the annual audit, review separately with each of
management, the independent accountants and internal auditing, if
applicable, any significant difficulties encountered during the course
of the audit, including any restrictions on the scope of work or access
to required information.
3. Review any significant disagreement among management and the independent
accountants or internal auditing, if applicable, in connection with the
preparation of the financial statements.
4. Review with the independent accountants, internal auditing, if
applicable, and management the extent to which changes or improvements
in financial or accounting practices, as approved by the Audit
Committee, have been implemented. (This review should be conducted at an
appropriate of time subsequent to implementation of changes or
improvements, as decided by the Committee.)
4. Business Conduct and Legal Compliance
1. Establish, review and update periodically a Code of Business Conduct
Policy and ensure that management has established a system to enforce
this Policy.
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2. Review management's monitoring of the Company's compliance with its
Business Conduct Policy, and ensure that management has the proper
review system in place to ensure that Company's financial statements,
reports and other financial information disseminated to governmental
organizations and the public satisfy legal requirements.
3. Review the necessity and advisability of establishing an internal
auditing function and, if established, review activities, organizational
structure and, qualifications of the internal auditing function.
4. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
5. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
6. Perform any other activities consistent with this Charter, the Company's
Bylaws and governing law, as the Committee or the Board deems necessary
or appropriate.
C-3
GLOBAL SPORTS, INC.
Annual Meeting of Shareholders -- May 24, 2001
SOLICITED ON BEHALF OF THE COMPANY AND APPROVED
BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael G. Rubin and Kenneth J. Adelberg to
act as attorneys and proxies for the undersigned, with full powers of
substitution, to appear at the Annual Meeting of Shareholders of Global Sports,
Inc. (the "Company") to be held on the 24th day of May, 2001 at the office of
the Company, 1075 First Avenue, King of Prussia, Pennsylvania 19406 and at any
postponement or adjournment thereof, and to vote all of the shares of the
Company that the undersigned is entitled to vote, with all the powers and
authority the undersigned would possess if personally present. The undersigned
hereby directs that this proxy be voted as follows:
1. To elect seven directors, each to hold office for one-year terms and
until their successors are elected and qualified. Nominees: Michael G. Rubin,
Kenneth J. Adelberg, Ronald D. Fisher, Harvey Lamm, Mark S. Menell, Michael S.
Perlis and Jeffrey F. Rayport.
FOR the nominees listed WITHHOLD AUTHORITY
below (except as indicated to vote for all nominees
below)
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any nominee write that nominee's
name in this space: .
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2. To approve an amendment to the Company's 1996 Equity Incentive Plan to
(i) increase the number of shares of the Company's common stock issuable under
the Plan from 4,500,000 shares to 7,500,000 shares, and (ii) increase the number
of shares which may be granted to employees covered by Section 162(m) of the
Internal Revenue Code of 1986, as amended, to 1,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the amendment and restatement of the Company's Certificate
of Incorporation in the form attached as Appendix B to the accompanying Proxy
Statement to (i) increase the number of authorized shares of the Company's
common stock by 30,000,000 shares from 60,000,000 shares to 90,000,000 shares,
(ii) increase the number of authorized shares of the Company's preferred stock
by 4,000,000 shares from 1,000,000 shares to 5,000,000 shares, and (iii) make
certain other changes to the Certificate, all as more fully described in the
accompanying Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED "FOR" ELECTION OF ALL NOMINEES FOR DIRECTOR LISTED IN
THE ACCOMPANYING PROXY STATEMENT, "FOR" APPROVAL OF THE AMENDMENT TO THE
COMPANY'S 1996 EQUITY INCENTIVE PLAN AND "FOR" APPROVAL OF THE AMENDMENT AND
RESTATEMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION. A MAJORITY OF THE
PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES (OR IF ONLY
ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE POWERS CONFERRED
HEREBY. DISCRETIONARY AUTHORITY IS CONFERRED HEREBY AS TO CERTAIN MATTERS
DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
The Board of Directors recommends a vote "FOR" election of all nominees for
director, "FOR" approval of the amendment to the Company's 1996 Equity Incentive
Plan and "FOR" approval of the amendment and restatement of the Company's
Certificate of Incorporation.
(Continued and to be SIGNED on Reverse Side)
Should the undersigned be present and choose to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the shareholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
Receipt of the Notice of the Annual Meeting and Proxy Statement relating
thereto is hereby acknowledged.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
Date: , 2001
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(Please date this Proxy)
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(Signature(s) of Shareholder(s))
Please sign exactly as your name(s)
appear(s) to the left. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held jointly,
each holder should sign.